How to Become a Mortgage Loan Officer [A 2022 Step-By-Step Guide]

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How to Become a Mortgage Loan Officer [A 2022 Step-By-Step Guide]

How to Become a Mortgage Loan Officer
How to Become a Mortgage Loan Officer

Content refreshed for accuracy on 10/28/2021.

If you’re considering jumping into the mortgage business, you probably have many questions about how to become a mortgage loan officer. So, read on for Jungo’s step-by-step guide on how to become a mortgage loan officer and join the industry that funds home buyer’s dreams.

What Does a Mortgage Loan Officer Do?

If you’ve gotten this far in your research, then you probably already know a little bit (or a lot!) about becoming a mortgage loan officer. However, to summarize, a loan officer (LO) evaluates a borrower’s loan application. They then work with both borrowers and lenders to determine what financing options are available to them.

In reality, however, an LO’s job includes much more than just that. Many mortgage loan officers are also in charge of their own lead generation or finding new potential borrowers. Additionally, mortgage loan officers are responsible for collecting and processing a borrower’s documents. They also ensure that the loan application is in compliance with state and federal requirements.

Being a loan officer also requires some serious creative thinking. For example, an LO may need to try to find an alternative option for a client. They may want to buy a house but do not have a high enough credit score to qualify. In these cases, and many others, an LO will often work closely with the borrower to come up with a plan to try to get financing.

Why Do We Need Loan Officers?

Buying a house is one of the biggest decisions that many people will make in their lives. Plus, the loan process can be very confusing. Because of both of these factors, it’s part of a loan officer’s job to be able to carefully and simply explain the loan process to their customers.

Ultimately, a mortgage loan officer makes it possible for a customer to borrow the money they need to purchase a home. This involves a lot of human interaction and detail-oriented, numbers-driven tasks, so great loan officers excel in these areas.

Buying a house is one of the biggest decisions that many people will make in their lives.

Is It Hard to Become a Mortgage Loan Officer?

How to become a mortgage loan officer isn’t as hard as you might think. While some procedures are stipulated by federal regulations under the Secure and Fair Enforcement Act for Mortgage Licensing of 2008 (SAFE Act), the exact process varies based on what state you live in and where you plan to work as a loan officer.

In general, the minimal essential requirements are to register with the National Mortgage Licensing System and Registry (NMLS), complete 20 hours of education, and pass the NMLS national exam. The current version of the test consists of 120 multiple-choice items covering five major areas corresponding to those covered in the 20-hour educational requirement:

  • Mortgage loan origination activities (27%)
  • Federal mortgage-related laws (24%)
  • General mortgage knowledge (20%)
  • Ethics (18%)
  • Uniform state content (11%)

Each state also has specific requirements on how to become a mortgage loan officer, which may include passing specific examinations and background tests. Altogether, completing these minimum requirements may take approximately 45 days, depending on your schedule, aptitude, and background.

Some mortgage loan officer positions require additional educational experience. A bachelor’s degree in a field such as finance or business is typical. If you already have such a degree, you’ll have a head start in this area.

If not, you may be able to gain some experience by passing the NMLS exam and taking a position which accepts that qualification, positioning you to apply for a better-paying opportunity later after you complete your degree. How long this process will take will depend on how much time you can commit to pursuing your degree.

What Do You Need to Do to Become an LO?

Compared to many fields with similarly competitive pay, the path to how to become a mortgage loan officer is a fairly straightforward process. Most loan officers have earned a bachelor’s degree, often in finance, business, or business administration.

However, not every position in the industry requires a four-year degree, so don’t be discouraged if you don’t have one. Instead, research certification options and college classes that could prepare you for the industry.

In order to become a loan officer, you will need to obtain a license. This process can vary from state to state. Generally, you will need to complete 20 hours of education, and then pass the NMLS National Test. If you want to see what you would need to do to become a loan officer in your state, check out this link for more info.

You may also need to pass a criminal history background check, get fingerprinted, and pass a credit check.

After You’ve Become a Loan Officer

Knowing how to become a mortgage loan officer isn’t all that’s required for a career in the field. Once you are working as a loan officer, you will need to renew your state certifications every year. You will also need to retake the NMLS National Test.

An additional, optional step to take is pursuing additional certifications. Although it is not required, you can choose to boost your resume. This can be done with certifications from The Mortgage Bankers Association (MBA) or the American Bankers Association (ABA).

Once you have a job, your company will likely have its own specific on-the-job training. Don’t worry if you don’t know exactly how to complete the daily tasks of a mortgage loan officer. You’ll learn with time and experience!

The exact path to how to become a mortgage loan officer is unique for each individual. For instance, some may begin as a Loan Officer Assistant or in another support staff position. Clearly, there are many ways to become a loan officer.

On the simplest level, here are the steps for how to become a mortgage loan officer followed by many people:

  1. Earn a bachelor’s degree (Optional)
  2. Obtain your Mortgage Loan Officer (MLO) license
  3. Find a job
  4. Complete any necessary on-the-job training
  5. Start closing loans!

How Much Do Mortgage Loan Officers Get Paid?

According to the U.S. Bureau of Labor Statistics, the median annual wage for LOs in the U.S. was $63,040. Because many loan officers are paid solely on commission, it’s important to consider the terms of your employment.

Before you become a mortgage loan officer, there are a few questions to ask yourself regarding your income:

  1. If your income is based solely on commission, what are the terms of your commission?
  2. Will relying solely on commission place an excessive amount of stress in your life?
  3. Are you comfortable not receiving benefits from a traditional employer like health insurance, 401(k), or sick time?
  4. Do you have a financial plan for when you’re starting out and don’t have many clients?

Remember, the type of company you work for will probably affect your compensation.

Many mortgage loan officers choose to work for a large company, such as a depository bank, credit union, or a mortgage banker. In those situations, you would be more likely to earn a salary. Or, a salary plus a small commission. Many jobs at larger companies also have more traditional job benefits. This includes insurance or a 401(k) retirement plan. In this situation, some LOs may work for a bank or a lender, but essentially run your own business.

If you prefer to see more of a direct return for your hard work on an individual loan, working for yourself or a smaller mortgage company may be the way to go. After all, in that scenario, you have the chance to earn a larger commission on each and every loan.

What Would Your Day as a Mortgage Loan Officer Look Like?

It depends. If you choose to work for a large corporation like a bank or a mortgage banker, or a smaller shop, your days will be very different.

The Bank Work Environment

If you’re working in a large, corporate environment, you can expect your day to be more traditionally structured. Not all, but most, large mortgage banks will want their employees in the office from 9 a.m. to 5 p.m. The dress code and office environment will probably be more formal.

The Small Business Work Environment

If you choose to work for yourself or for a smaller branch, your day can vary wildly depending on personal preference and company expectations. Some LOs choose to come into the office later in the morning and stay past traditional work hours in order to call potential leads when they are home in the evenings. Others hit the ground running in the early morning so that they can leave by mid-afternoon.

In these situations, it’s often up to the individual to determine the work schedule that works best for them. It’s all about closing loans, however you can do that most successfully is the way you’ll want to plan your day or week.

It’s all about closing loans, however you can do that most successfully is the way you’ll want to plan your day or week.

Common Daily or Weekly Tasks

However you choose to structure your day, there are a few things that you can expect from your daily schedule as a mortgage loan officer.

1. Lead Generation

Being a loan officer revolves heavily around one thing: sales. After all, you need to find the people who want a mortgage and help them choose you as their LO. There are over 300,000 loan officers in the United States (according to the U.S. Census Bureau). Not to mention online mortgage lending platforms are on the rise. Needless to say, the competition is fierce. This means that a large portion of a loan officer’s energy goes toward finding and cultivating new leads.

Once again, depending on your personality, the company you work for, and the market that you operate in, the methods for finding new leads varies.

It’s all about closing loans, so however you can do that most successfully is the way you’ll want to plan your day or week.

Lead Generation: Purchased vs. Organic

Some loan officers choose to purchase leads from sites like Zillow or Lending Tree. If you pursue this method, you will still need to cultivate these potential clients. This can be a difficult task. After all, receiving a cold call can be unexpected and even unwelcome.

Purchasing leads can be a successful method for some loan officers, but there are a couple of critical things to keep in mind.

If you choose to find and develop leads on your own, you will probably pursue this in multiple ways. Not only does this create trust between you and your clients, but it also can lead to opportunities for new business through referrals or refinancing situations.

If you want to learn more about generating business through calling, see how a top producer schedules her day.

Referral Partners: A Loan Officer’s Secret Weapon

Another popular way to generate leads is through referral partners. Referral partners are industry professionals, often real estate agents, who send mortgage leads your way. These partnerships are absolutely invaluable for a mortgage loan officer, and as such, careful attention needs to be given to developing these connections.

If you’re just getting started, finding referral partners can be a daunting task. Don’t be discouraged if it doesn’t happen right away. Cultivating referral partner relationships is a process that takes time.

If you’re wondering how to find partners, consider actively marketing to potential partners through networking. Especially if you’re new in the industry, it’s critical to make your face and name known, and build trust by proving your competency. Hand out business cards and marketing materials when you meet a new professional contact, but be careful not to come across as desperate. Instead of begging for their referrals, prove that you deserve their referrals through your industry knowledge and efficiency. Remember, if you can get their clients a loan, it means they’ll be able to get their commission, too.

Face-To-Face: The Key to Relationships

Don’t forget to focus on face-to-face relationship building also. Many successful loan officers choose to set goals for themselves regarding their referral partners. Maybe you decide to meet six different real estate agents for lunch a month, and attend one networking event every two weeks that will gain you contacts in the industry. Persistence is key in building these relationships–after all, just like friendships, they won’t develop overnight.

In addition, time blocking either certain times of the day or certain days of the week for partner development is what many mortgage coaching programs recommend as the best protocol for lead generation.

There are many other ways to generate leads as a loan officer–in fact, we wrote a whole post about it here.

2. Close Loans

A huge portion of an LO’s day is focused on finding and developing the leads that will become clients. But, it’s impossible to forget about the task of actually closing loans.

The mortgage industry has experienced a huge amount of automation, which means that an LO’s paperwork has dwindled. However, you can still expect a decent portion of your week to be dedicated to evaluating loan applications and collecting documents.

3. Communication

This is a large part of being a loan officer, and it’s important to keep in mind as you consider the career. An LO needs to keep a borrower and any relevant referral partners in the loop at all times. This may require phone calls or emails giving loan status updates. Plus, you should be ready to answer any questions or concerns that the borrower may have.

Additionally, communication is important after a loan has closed. For many LOs, referrals and repeat clients are relied on for their business, so staying in close contact is key. Many choose to utilize drip post-close marketing campaigns. These can look different depending on the broker and the client’s preferences.

Whether they send emails, call to check-in, or even send thank you gifts straight to a client’s front door, an LO needs to consider how to make the borrower feel valued at all times. One tried-and-true method is through consistently calling of possible and past clients.

Will You Be Good at Being a Loan Officer?

Becoming a mortgage loan officer is not the hardest part of being one. Compared to many jobs, the chance for financial success is very possible. However, you will need to be skilled in sales to earn large commissions.

It’s important to look closely at what the job entails and how it matches up with your personality. Here are some traits that great loan officers often have and why they’re important in the profession:

You’re a Self-Starter

Whether you work in a bank environment or choose to start your own business, you need to have some serious self-motivation. Persistence in pursuing sales, and goal setting are a large part of what sets successful LOs apart from the rest.

You’re Comfortable With Some Job Related Stress

Every job has its ups and downs, but a job that often relies solely on commission holds its own special challenges. It’s important to be aware of the possible lack of financial stability (especially if you’re just starting out). On the flip side, however, this can also lead to huge financial windfalls and exhilarating career success.

You’re Familiar with Working with Numbers

You don’t need to be a math expert to be a great loan officer. However, there’s obviously a large component of the job that involves numbers. Being comfortable dealing with numbers is critical to not getting lost in the details of the loan process.

You Enjoy Working Closely With People

If you made it this far in this article, then you know how important working with people is to the job of an LO. If you love interacting with lots of different people, then being a loan officer may be a great fit for you.

Bottom Line

Choosing to become a mortgage loan officer is like other jobs and includes a level of risk and stress. But there is also the potential for incredible success and fulfillment. If you are interested in how to become a mortgage loan officer as a career path, talk to some people in the industry. Then, read up about the job requirements, and jump in!

Once you finish the necessary certifications and training, start your job hunt. Begin with traditional job search channels, like online job boards or other community resources. You can also check with banks, credit unions, or other financial institutions directly. Many banks post their job openings on their website.

When you become a loan officer, your job can be summed up in a very simple idea. You’re helping to get people into their dream home. And who doesn’t want to be a part of that?