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What Does a Mortgage Loan Officer Do?

By Timothy Moore · March 06, 2023 · 6 minute read

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What Does a Mortgage Loan Officer Do?

A mortgage loan officer helps borrowers determine if they qualify for a home loan, and, if so, find the right type of mortgage and best interest rate and terms for them.

Throughout the home-buying process, your mortgage loan officer will review your information, collect necessary documentation, and track important milestones leading up to closing.

Mortgage loan officers, also called mortgage loan originators, typically work for a specific bank, credit union, or mortgage company.

In this piece, we’ll discuss:

•   What a mortgage loan officer is and does

•   How to find a mortgage loan originator

•   The differences between a mortgage broker and a loan officer

•   The qualifications of a mortgage loan officer

What Is a Mortgage Loan Officer?

The mortgage loan process can be nerve-wracking, even if it’s not your first go-around.

A mortgage loan officer serves as a guide. This individual, sometimes licensed and certified, helps potential homebuyers determine if they qualify for a loan and, if so, which type of home loan is right for them.

A mortgage loan officer is a type of mortgage loan originator (MLO), a regulatory term. An MLO may also refer to a company that does mortgage originations, like a mortgage broker.

What Does a Mortgage Loan Officer Do?

A mortgage loan officer has two main responsibilities:

1.    Accept and review mortgage loan applications from prospective homebuyers

2.    Work with borrowers to determine loan terms, including interest rates

Of course, mortgage loan officers’ day-to-day duties include much more than these two tasks. In a given week, they might meet with potential borrowers to review their options and explain basic loan definitions, work with underwriters to process loan applications, coordinate with home appraisers to ensure a house is worth what a borrower is offering, and monitor important deadlines for various clients to ensure everything is moving along correctly ahead of closing.

Mortgage loan originators charge a fee for their services. Homebuyers can typically expect to pay this fee as part of their closing costs.

Recommended: How Rising Inflation Affects Mortgage Interest Rates

How to Find a Mortgage Loan Originator

Do you need a mortgage loan officer for a home purchase or refinance? Here are some tips for finding a mortgage lender and loan officer, whether you’re an experienced or first-time homebuyer.

Reading Reviews

Reading about other borrowers’ experiences with particular loan officers and lenders can help weed out the ones you should avoid. Sites like the Better Business Bureau are good resources for customer reviews.

Asking Family and Friends

Online reviews aren’t your only source for feedback. You can talk with friends and family who have recently purchased a home to see if they would recommend their loan officer. If you belong to special groups on social media, like a neighborhood group, you can survey a larger group for recommendations for a mortgage loan originator near you.

Talking with Your Real Estate Agent

Real estate agents work closely with a wide range of loan officers. Your agent may be able to recommend a mortgage loan officer with a good reputation.

Shopping Around

Whether you’re interested in a local bank or an online lender, you have multiple options available. Researching multiple lenders online can help give you an idea of the right mortgage loan originator for you.

Interviewing Multiple Mortgage Loan Officers

When you have narrowed down your list, it’s a good idea to interview a few mortgage loan officers. If you let them know that you’re considering multiple options, they may even feel incentivized to offer you a better deal.

Checking Their License

In some cases, mortgage loan officers must receive formal education, register with the government, pass a licensing test, and take continuing education classes to maintain their license.

You can check a license number through the Nationwide Multistate Licensing System & Registry (NMLS) consumer access site.

Mortgage loan officers at covered financial institutions (those that are highly regulated) are not required to be licensed; they only need to be registered.

Mortgage Broker vs Direct Lender

If you’re thinking about mortgage shopping, you’ll want to understand the difference between a mortgage broker vs. direct lender.

A loan officer typically works for a specific bank or lender and can thus only offer you loan options from that institution. At bigger banks, you may only be able to access their loan options through their own mortgage loan officers. Working directly with a loan officer may yield discounts on closing costs or access to better rates.

A mortgage broker, on the other hand, does not directly lend you money. Instead, for a fee, brokers shop around to find you the best deal given your financial situation (credit score, down payment, income, etc.).

Because brokers aren’t tied to a specific lender, they might be able to find you a better deal. But brokers do not have access to every lender, so you still might be missing out on the best deal available.

The fees charged by mortgage brokers may be higher than those charged by direct lenders. If you’re deciding whether to work with a broker or direct lender, ask about all the fees associated with loan generation.

Recommended: Can You Roll Closing Costs Into Home Loans?

What Are the Qualifications to Become a Mortgage Loan Originator?

MLOs may follow multiple career paths, each of which may require different levels of education and licensure.

Education

At a minimum, MLOs need to be at least 18 years old with a GED. Many officers at least obtain a bachelor’s degree, often in business, finance, or mathematics.

License vs Registration

If you wish to work independently, for a broker, or for a nonbank, you must obtain licensure. A license is also a value proposition to potential homebuyers: It tells them that you have passed a difficult test and commit to continuing education.

If you work for a “covered financial institution,” you will not be required to obtain a license. You’ll simply need to register every year. The financial institution that employs you will likely coordinate this.

To earn your MLO license, you will need to:

•   Complete 20 hours of courses, as required by the NMLS.

•   Take and pass a state license test.

•   Pass the SAFE MLO test. (SAFE stands for the Secure and Fair Enforcement Act, which established guidelines for MLOs after the housing crisis in 2008.)

•   Keep up with NMLS requirements, including registration and continuing education.

Characteristics

Beyond the registration or license, a good mortgage loan officer will typically need the following qualities:

•   Good with numbers

•   Interpersonal skills

•   Strong decision-making and organization

•   An eye for detail

Recommended: What Are Subprime Mortgages?

The Takeaway

A mortgage loan officer helps potential homebuyers find a fitting mortgage, apply for the loan, and meet deadlines. You can interview several mortgage loan originators to see what they offer.

Are you starting to shop for a home mortgage loan? SoFi offers competitive rates and requires as little as 3% down for qualifying first-time homebuyers.

Get started by finding your rate.

FAQ

What are the job responsibilities of a mortgage loan officer?

A mortgage loan officer reviews mortgage loan applications and determines which loans and rates to offer potential homebuyers. The officer works with underwriting on loan approval, then helps the homebuyer through the process until closing.

What is the difference between a loan officer and mortgage broker?

A loan officer, aka mortgage loan originator, typically works for a lender and has access to the best deals of that particular lender. A mortgage broker helps homebuyers shop for the best deal, though they don’t have access to every possible loan.

How do you find a mortgage lender?

To find a mortgage lender, it’s a good idea to read online reviews, ask friends and family for recommendations, talk to your real estate agent about a referral, and shop around online.


Photo credit: iStock/Paperkites

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