How to Become a Loan Officer

If you are considering a career as a mortgage loan officer, you are not alone. In fact, U.S. News lists a loan officer in the top 10 careers in the business jobs category. But what does it take to become a loan officer require? What licensing is required? Do you need specific training? Here we look at exactly what a loan officer does, and the steps required to become licensed and maintain your license.

What does a loan officer do?

Loan officers work to determine whether corporations or individuals qualify for loans from banks or other financial institutions. To do this, they examine the applicant’s financial records and, using underwriting principles and specific formulations, work to determine the applicant’s ability to repay the loan. It can include the examination of things like income, income-to-debt ratio, job stability, and assets.
In addition to working numbers, loan officers must also possess excellent customer service skills. Not only are you required to find clients for loans, but you are also working with people, families, and corporations and walking them through the loan process, often through major milestones of their life. Common duties of mortgage loan officers include:

• Identifying potential homebuyers and loan applicants through advertising, networking, etc.
• Gathering all the necessary information from applicants
• Presenting loan options that work with the applicant’s needs and means
• Keep accurate records
• Coordinate with other professionals, such as appraisers and underwriters

Becoming a loan officer

If you are considering a career as a mortgage loan officer, there are a few things to consider. Your personal traits and personal history can plan a big part in your ability to become a loan officer and how well you will succeed. In addition to looking at those qualities, we will also look at what is required to become a loan officer.

Your personal qualities

A successful loan officer will be a well-organized and outgoing individual. Because you are dealing with a wide range of people, having an outgoing personality will be a great benefit when it comes to gaining referrals and acquiring new clients and your direct dealings with clients.

When it comes to working with applicants on their loans, you will be processing a lot of personal information and it is essential that all this information be carefully organized and handled with the utmost care and accuracy. Having excellent organizational skills helps you better manage this information and provide better service to your applicants.

As a loan officer, knowledge is essential, and you should never stop learning. For example, as a mortgage loan officer, you should have knowledge of the ever-changing real estate industry. If you are always looking to learn something new, then a mortgage loan officer may be the perfect fit for you.

Examine your personal history

Loan officers work with banks and lending institutions every day. Because of this, loan officers must undergo extensive background checks, looking at things like your credit reports and credit history, foreclosure history, defaulted loans, fraud-related criminal history, and more. A person must have financial character and stability to become a loan officer.

Pre-licensure education, requirements, and certification

The National Mortgage Licensing Service (NMLS) is the regulatory body for all mortgage loan officers and to become a loan officer, you must take pre-licensing education, pass license testing, and submit the required information. While some enter this field with degrees in banking or business, the only traditional education requirement is a high school diploma. The educational focus for this career falls in the licensing requirements. Let’s take a closer look at each step.

Pre-License Education

All potential mortgage loan officers must complete a pre-licensing education course. This course includes the required base of 20 hours, though each state may have additional education requirements, so it is important to check with your state before beginning a pre-license course. Topics included in the base 20 hours include:

• 3 Hours of Ethics – this covers fraud, consumer protection, and fair lending.
• 3 Hours of Federal Law and Regulations
• 2 Hours Nontraditional Mortgage Product Market
• 12 Hours of Mortgage Origination Instruction

The Safe Act Requirements

While each state is different when it comes to education hours and requirements, there are some requirements that every applicant must submit. Based on the Secure and Fair Enforcement Act for Mortgage Licensing of 2008, all mortgage loan officers must adhere to the following guidelines:

• Provide authorization to obtain a credit report
• Provide necessary identifying information
• Undergo a criminal background check, including fingerprinting
• Provide financial services employment history for the past 10 years
• Disclose any financial regulatory charges against them
• Obtain license from their respective state
• Register with the NMLS
• Attest that all information is accurate and complete

NMLS Testing and Requirements for Licensure

Once your education requirements are met, you will sit for the SAFE MLO Test. This test evaluates your knowledge of state and federal mortgage lending law. Every application must pass the test with a score of at least 75%. If you fail your first or second attempt, you must wait at least 30 days before retaking the test. If you fail a third time, you must wait an additional 180 days before another test can be given. Once you pass the exam, other requirements include:

• Fee payment: Applicants must pay all required fees to obtain their license. These fees vary by state.
• NMLS Unique Identifier: Every company or individual with an NMLS account is assigned an NMLS Unique Identifier number and is designed to track all mortgage-related services, including advertising.
• Sponsorship: Individual mortgage loan officers must be sponsored and supervised by an employer, and each state must approve of each sponsorship.

Maintaining your loan officer license

Once you receive your license, you are ready to go to work. However, your education does not end with your pre-license course. Every active mortgage loan officer must renew their license each year and that requires continuing education courses. It is your responsibility to complete this education and all the requirements for renewal and failure to do so could result in you losing your license. In addition, you must keep all your information current with the NMLS. For instance, if you change companies, you must inform the NMLS.

Frequently Asked Questions

While we have provided some basic information on becoming a mortgage loan officer, here is some additional information answering some frequently asked questions.

How long does it take to become a mortgage loan officer?

How long it takes to become a loan officer depends on where you want to work. Some banks of financial institutions require a bachelor’s degree before taking the pre-licensing exam. In this case, your degree can take up to four years before you begin your pre-license education. Pre-license education can take a few weeks to a few months.

What education is required to become a loan officer?

While only a high school diploma and a pre-licensing education course are required to become a mortgage loan officer, many banks and financial institutions also require a bachelor’s degree.

Can you become a loan officer while working another job?

Yes, you can do your pre-licensing education on a full-time or part-time basis, meaning you can pursue your education and career change while working another job.

Take the next step in your career

If you are interested in pursuing a career as a mortgage loan officer, do your research in both the mortgage and the estate fields to help boost your knowledge and improve your chances of success. The information we have provided will help guide you through the process and, once you begin working as a mortgage loan offer, we are here to help.

The team at Good Vibe Squad is here to help you build and grow your business once you get started. Contact Good Vibe Squad today to learn more.

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