Your guide to getting the NMLS MLO licensing exam on your first attempt
Do you aspire to be a part of a flourishing career where opportunities for earning a six-figure income are common and the ability to work remotely is a norm?
Do you dream of a fulfilling work profile where you can contribute meaningfully while making the most of rewarding professional opportunities?
If the answer is yes, then working as a mortgage loan officer might just be the perfect career path for you.
A mortgage loan officer (MLO) is a licensed professional who works as an intermediary between lenders and borrowers.
MLOs are employed by financial institutions such as banks, credit unions, and mortgage companies and they play a pivotal role in the home buying process.
Since buying or refinancing a home is a major financial decision for most people, they seek the expert guidance and assistance of a loan officer.
The Bureau of Labor Statistics in the U.S. has projected a steady demand for skilled and licensed mortgage loan officers estimating the addition of 30,000 new job openings by 2030.
Depending on where you live and work, you can make as much as $170K annually as a mortgage loan officer.
Plus, there are additional opportunities for earning commissions and extra perks which you can enjoy as a loan officer in the U.S.
To enjoy the amazing benefits and privileges of this rewarding and exciting career path, you would first need to obtain an MLO license in your state.
Getting a license is mandatory to be able to work with clients and assist them in making financial decisions based on your recommendations and advice.
If you are curious to learn more about how to obtain an MLO license and what it takes to become a licensed professional, this in-depth guide will answer your questions.
In this article, we will give you a detailed deep dive into the steps required to get a MLO license in your state.
From choosing an MLO license course to passing the licensing exam on your first attempt, you will learn about all the aspects of starting a new career in the mortgage lending industry.
The Job Profile of a Mortgage Loan Officer
A Mortgage Loan Officer (MLO) is a licensed professional who is legally allowed to help
Individuals compare and choose the most suitable mortgage loan option for their needs.
MLOs usually work in banks and financial institutions and have to obtain a specific license
based on the type of organization they work for.
The key job responsibility of a mortgage loan officer is to act as an intermediary between lenders like banks and credit unions and borrowers like homeowners looking for a mortgage.
A mortgage loan officer is a skilled professional who guides, assists, and navigates home buyers through the different stages of obtaining a mortgage loan, from application to closing.
It is expected from an MLO to be fully aware of the different types of financing options and plans available in the market so as to guide and assist their clients in choosing the most feasible one.
Due to the highly sensitive and critical nature of their work, it is essential for loan officers to complete mandatory pre-licensing education and training to acquire the knowledge and skills.
Whenever an individual is ready to buy a new home or refinance their existing one, they seek the assistance and guidance of a skilled loan officer.
The Job Duties of a Mortgage Loan Officer
From helping with loan documentation to evaluating the various financing options - a loan officer navigates their clients through the various stages of obtaining a mortgage.
Mortgage loan officers are expected to complete multiple tasks encompassing a range of administrative, operational, and compliance duties. Let’s look at the main ones below.
1. Help with the loan application
MLOs are the go-to people when it comes to completing the paperwork required for a loan application.
Mortgage loan officers help collect the required documents such as income proofs, financial documents, tax records, and credit reports to evaluate the creditworthiness of a client.
As a loan officer, you must assist clients in providing the required information required for completing a mortgage loan application.
2. Evaluate the best loan plans
A mortgage loan officer works as an advisor and an advocate for their client, helping them choose and finalize the most suitable mortgage plan.
It is both the duty and the job of the loan officer to provide a detailed comparison of the different loan options available for their clients and assist them in evaluating the pros and cons of each.
By helping clients compare various plans and products, mortgage loan officers help clients in make the right decision to meet their needs and requirements.
3. Submit the required paperwork
Getting a mortgage loan requires the submission of a list of financial and personal documents such as income proofs, credit reports, assets, and tax documents.
A loan officer guides their clients on what documents to include in their loan application
and how to prepare their application for fast approval.
MLOs ensure that every piece of information and documentation submitted is accurate to avoid any delays and reduce the chances of rejection from loan providers.
4. Provide constant updates
As the single source of communication for all key updates regarding the loan application, MLOs ensure their clients are updated at every stage of the financing process.
A mortgage loan officer’s responsibilities extend beyond the loan application as they are also expected to guide their clients after the disbursal of the funds.
A loan officer provides timely updates related to all the key milestones and keeps their clients abreast of the major developments and deadlines.
As you might have figured out by now, a mortgage loan officer has to manage multiple tasks and duties as part of their job profile.
To be adept and skilled at satisfying the demands and expectations at work, it is essential for MLOs to invest in their education and training.
Completing a mortgage loan originator course is not merely a mandatory eligibility requirement but a foundation upon which a successful career is built upon.
Next, let us give you an overview of the steps you need to complete to earn your MLO license in the U.S.
Steps to obtain a MLO license
Step 1: Register with the NMLS
In order to obtain a license in your state, you must register with the National Mortgage Licensing Service (NMLS).
You can do so by visiting the NMLS website and creating a new account.
After creating an account, you will receive a unique NMLS identification number registered with your license and details.
Step 2: Fulfill the basic eligibility requirements
Firstly, you must be 18 years of age or older and have a high school diploma or GED equivalent in education to be eligible to apply for an MLO license in your state.
Secondly, you must have a bachelor’s degree in finance, accounting, or business administration.
Step 3: Meet NMLS pre-licensing requirements
The NMLS (National Mortgage Licensing Service) is the national regulatory and licensing authority for individuals and companies working in the mortgage lending and finance industry.
According to the NMLS guidelines for licensing, you must complete the mandatory pre-licensing training and course credits to qualify for an MLO license in your state.
Generally, the NMLS requires applicants to complete 20 hours of SAFE-approved pre-licensing courses.
However, some states might require applicants to complete additional course credits too.
You will learn about the various principles, laws, and regulations of the mortgage and lending industry. Plus, you will also learn about general mortgage terms and concepts.
Step 4: Complete background and criminal history verification
As per the SAFE (Secure and Fair Enforcement) Licensing Act, it is mandatory for aspiring loan officers to meet the standards for honesty, integrity, and trustworthiness.
To prove your eligibility, you must complete mandatory background verification and criminal history checks.
As part of this step, you must submit an electronic copy of your fingerprints along with the latest credit report to the NMLS online or via mail.
Step 5: Pass the NMLS licensing exam
After completing your pre-licensing education, the next step is to pass the SAFE mortgage loan originator test in your state.
The test is formulated to evaluate your preparation and knowledge and will ask you multiple-choice questions covering both state and national-specific portions.
To pass this test, you must score a minimum of 75% or above.
Step 6: Find employer sponsorship
After completing the pre-licensing education, fulfilling the background verification requirements, and passing the exam, you will receive your MLO license.
However, to activate your license, you must find employer sponsorship from an authorized senior loan officer or a financial institution in your state.
Tips to pass the SAFE licensing exam
Many students and applicants often find the SAFE MLO national test as daunting and intimidating because the test is challenging in many regards.
Despite an average first-time passing rate of around 57 percent, you should not feel discouraged or nervous before attempting the exam.
Yes, passing the MLO licensing exam on your first attempt is difficult, but with the right knowledge and preparation, it is certainly an achievable feat.
If you are ready to give the exam your best attempt, here are some practical tips to maximize your exam readiness and preparation.
Study Tip 1: Choose the right pre-licensing course
Investing in the right course is critical to ensure you are learning from expert trainers and have access to accurate, most updated course material.
Irrespective of where you live, there are numerous course providers to choose from and you can easily weigh your options.
Make sure to do your research before finalizing one and ensure they are NMLS-approved.
Study Tip 2: Practice using sample questions
Completing practice tests using sample questions is a good way to familiarize yourself with the exam format.
Mock tests are highly useful in your preparation as they can help you acquaint yourself with the type of questions asked in the exam.
Test prep courses can help you understand your strengths and weaknesses and will give you an objective evaluation of your preparation.
Study Tip 3: Revise important topics
Like most exams, the SAFE MLO test also consists of a few important topics based on the courses covered in your pre-licensing education.
These topics are generally state-specific laws, federal rules, industry terms, mortgage regulations, and guidelines.
Revising them again before the due date will help you get a good refresher on the fundamentals.
You can make use of flashcards to keep a quick tab on the important concepts and practice them before the exam day.