When you want to enter the mortgage industry, becoming a loan officer can be a good start. This is typically an entry-level job, but experienced loan officers tend to access the best jobs. If you want to know how to become a loan officer, the steps are found later in this article.
What is a loan officer?
When you become a loan officer, you will likely work in the mortgage industry. You will help people apply for and qualify for mortgages when buying a home. This will include checking the credit of clients and other factors to make sure they are eligible.
How to Become a Loan Officer One Step at a Time
Step #1 – Finish High School
You will need a high school education to have any chance of becoming a loan officer. Without a high school diploma or equivalent, you won’t be able to become a loan officer. This is also the first step towards a bachelor’s degree, which can be very helpful.
Step #2 – Earn a Bachelor’s Degree (Optional)
While you don’t need to earn a bachelor’s degree to become a loan officer, it can be very helpful. Many companies require or at least prefer a bachelor’s degree in business or finance for their loan officers. In addition, you will likely need to complete courses in accounting, statistics, finance, and mathematics.
You will need to help clients with their loan application process, which means you need good communication skills. Taking a few college courses in public speaking and communications can be helpful.
Step #3 – Get Some Job Experience
Employers in the mortgage industry prefer previous experience. If you don’t get a bachelor’s degree, it will become even more necessary. Aspiring loan officers can start by working in customer service, sales, telemarketing, or banking before working up to becoming a loan officer.
Even with a bachelor’s degree, it may be necessary to gain experience. For example, you may need to start in an entry-level position or at a smaller firm. Then, you can work your way up to a career as a loan officer.
Step #4 – Gain On-The-Job Training
Most mortgage lenders and banks will require on-the-job training. In addition, you may need to complete training for lending products offered by the company you decide to work for. The training may vary, depending on the type of work environment and lending products.
Along with training about the loan products offered, you may need to learn specific software. Usually, the software is used for mortgage underwriting.
Step #5 – Get your Mortgage Loan Officer License
As a mortgage loan officer, you will need to become a licensed mortgage loan originator. This includes completing 20 hours of coursework and passing the exam. You will also need to pass a background check and a credit check.
Each state may have specific components on the MLO (Mortgage Loan Officer) exam. In addition, once you become licensed, you’ll need to complete continuing education credits every year to renew your license. Usually, you will need eight hours of courses each year, but this varies by state.
Step #6 – Gain Certifications
Loan officers don’t need to become certified. However, it can help you compete in this very competitive field. In addition, youSo if can land one of the better loan officer positions at a larger firm with the right certifications.
Some of the top certifications for loan officers include:
- Certified Trust and Financial Advisor
- Certified Financial Marketing Professional
- Certified Lender Business Banker
These certifications come from the Mortgage Bankers Association and the American Bankers Association. These associations offer several options, including executive, master, commercial, and residential programs. You will need to complete the necessary requirements and pass the right exam.
Once you become certified, you will need to renew your certification every few years. This may require continuing education courses.
Common Tasks of a Loan Officer
After you learn how to become a loan officer, it’s a good idea to figure out what you will be doing each day and week. Loan officers handle many common tasks, including:
- Lead Generation – Some loan officers have to handle their own lead generation, while others gain leads from their employer. It’s common to find employers who expect a lead generation combination by providing some leads for you.
- Loan Closing – A big part of a loan officer’s day will take leads and turn them into clients. Then, after qualifying clients for a loan, closing the loan is necessary. This requires the right paperwork to be completed.
- Communicate – Loan officers will need to communicate with clients regularly. This includes new leads and current clients.
With these tasks, you will likely spend time checking credit, entering financial data into loan underwriting software, and pairing clients with the right loan program.
As a loan officer, you will take care of many of the following things:
- Make sales calls
- Learn any new loan products
- Review loan applications
- Process loans
- Coordinate with title reps, real estate agents, and insurance agents
Some of the best loan officers become very connected with those in the real estate industry. This is important since most mortgages are used to buy houses. As a loan officer, you may also work with clients in need of a refinance loan.
Frequently Asked Questions About Becoming a Loan Officer
Is a college degree necessary to become a loan officer?
No. You can become a loan officer with a high school diploma or equivalent. However, it’s common for employers to prefer a bachelor’s degree in finance, business, economics, or a related field.
About half of those working as loan officers don’t have a college degree. However, the other half has a bachelor’s degree, which usually leads to more job opportunities.
What’s the career outlook for loan officers?
Loan officers have an above-average job growth expected over the next ten years. The field is expected to grow at about 4%, lower than the average of 5% across all occupations. As a loan officer, you will be able to enjoy good job security with many opportunities.
Are there any advancement opportunities for loan officers?
Yes. Loan officers tend to advance to larger firms and branches. They may also climb the ladder to manager or supervisor positions within their firm. Some loan offices go out on their own and start a mortgage brokerage.
How long will it take to become a loan officer?
With many banks and mortgage companies preferring a bachelor’s degree, you can expect this job to take about four years to qualify. However, if you can find a lender or bank willing to hire you without a college degree, it can be much faster. To become a licensed mortgage loan originator, you will still need to pass the prelicensing education requirements and exam.
What’s the salary of a loan officer each year?
A loan officer can earn an average salary of more than $60K per year. The top loan officers can make about double that, while some entry-level jobs will pay much less.
Some loan officers earn a base salary and commissions for the sales they generate. This can lead to a higher amount of pay if you’re good at your job.
What type of work environment is common for loan officers?
Loan officers typically work in two specific work environments. First, they may be found in a bank or larger lending firm. These types of jobs usually come with common nine-to-five workdays and a professional dress code. This will likely be a more formal type of work environment.
Another type of work environment common for loan officers is the small business environment. You can go into business for yourself or work for a smaller lender. In this case, the type of hours you will work and the environment will vary a bit, depending on the type of company you work for.
What type of skills do you need to become a loan officer?
If you want to become a successful loan officer, you will need the right skills. Self-starters work very well for this type of career. In addition, you should have good critical thinking skills, math skills, writing skills, and active listening skills.
Since a loan officer works with numbers and will work directly with clients, it’s a good idea to make sure you have skills with working with people and numbers.
Who hires loan officers?
Most commonly, loan officers work for banks and lenders. However, they may also work for credit unions, mortgage brokers, or even real estate brokers. Any type of lender may need to hire loan officers to help clients find the loan they need. While this career is commonly found in the mortgage industry, it can also be found in any industry needing any type of loan.