How to become a loan officer: A step-by-step guide for 2024

Last updated: April 25, 2024
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Eleana Bowman
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How to become a loan officer: A step-by-step guide for 2024
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Are you interested in a career that requires little education or experience?

Maybe you’re tired of the job you currently have.

Or maybe you have always been interested in finance but don’t have the time or money to go to college.

Or you like the idea of working with people to help them achieve their dreams.

If any — or all — of this describes you, you might want to look into becoming a loan officer.

In this post, you will find out what loan officers are, the different types that are out there, and what they do every day. You will also learn about the benefits, salary range, and job outlook. Finally, you’ll discover the steps you need to take to become a loan officer.

Ready to learn all about this job?

Let’s get started.

What is a loan officer?

Here’s a brief rundown if you’d like to know more about this career:

  • Loan officers work with potential borrowers to help them obtain loans. They typically work in a bank, credit union, lending office, or another financial business.

  • They help clients distinguish between the different types of loans to narrow down which one would be the best fit for them.

  • They also help clients decide how much they can expect to borrow, as well as the interest rate for the loan.

  • Loan officers manage the paperwork involved in this process and keep their clients informed of deadlines for their loans.

Types of loan officers

Loan officers generally fall into one of three major types: commercial, consumer, and mortgage.

  1. Commercial loan officers typically work in banks, credit unions, or other financial institutions. They offer loans to support small businesses, whether they’re startups, redesigns, or expansions.

  2. Consumer loan officers also tend to work in banks, credit unions, or other financial institutions.

Wells Fargo is one example of a large banking industry that employs loan officers.

Consumer loan officers help their customers complete loan applications for personal needs, such as home improvement ventures, wedding planning, or dream vacations. They also provide automobile loans.

  1. Mortgage loan officers work in mortgage companies and other lending institutions that specialize in real estate. They help prospective buyers determine the best loans for their new homes, whether those loans are conventional, adjusted-rate, jumbo, or government-backed.

Mortgage loan officers also help current homeowners refinance their current terms. Refinancing is especially important when interest rates drop, as it helps owners reduce their monthly payments.

Despite the different types of loan officers, many of their day-to-day responsibilities are similar. We’ll delve into these below.

What does a loan officer do?

The job responsibilities of a loan officer include:

  • Helping potential borrowers with every aspect of the loan process from start to finish. This includes presenting clients with options, responding to questions, and meeting deadlines.

  • Determining whether an applicant is eligible for a loan based on their financial, credit, and work history. They will research the applicant and obtain evidence to support a recommendation for a loan.

  • Working with other professionals in their industry, including real estate agents, appraisers, underwriters, homeowners associations, and automotive dealers.

  • Completing, maintaining, and submitting all the paperwork associated with each loan on time and to professional standards.

  • Generating new business for their employers. They may look for new clients through advertising, seminars, or email campaigns.

If these responsibilities sound appealing to you, read on to discover the benefits.

What are the benefits of becoming a loan officer?

There are some clear benefits if you decide to pursue a career as a loan officer. Here are just a few of them:

  • No experience is needed. You do not need a background in this field to get started.

  • Short time frame. Although you will need a license to work as a loan officer, the length of time it takes to obtain one is short.

  • Benefits offered. The company you work for may offer benefits such as health insurance, bonuses, and retirement.

  • Job satisfaction. You may find a lot of satisfaction in helping their customers achieve their goals. Knowing you have helped a client finance the perfect home or home office project can be very rewarding.

Do you have these benefits in your current job? If not, a career change might be worth considering.

What is the salary and job outlook for loan officers?

The median salary and overall job outlook for loan officers are strong, according to the U.S. Bureau of Labor Statistics.

The most recent Occupational Employment and Wage Statistics for loan officers reports a median annual salary of $63,380.

Depending on the employer, some loan offers may even work for partial or full commissions.

And job growth for loan officers is on the rise. The demand for mortgage, personal, and commercial loans will continue to increase, leading to an estimated 4% boost in employment opportunities for this profession from 2021 to 2031.

How to become a loan officer step by step

Here are the steps you’ll need to take if you want to become a loan officer:

  1. Start with the basic qualifications

Check to see if you meet the following requirements first. These include the following:

  • Age minimum. You must be at least 18 years old to become a loan officer.

  • Background. You will need to undergo a series of background checks. Expect to see your financial, credit, and criminal histories examined.

  • Education requirements. You do not need a bachelor’s degree to become a loan officer. You should, however, hold a high school diploma or General Educational Development (GED) certificate.

  • Experience. Experience working in a bank, credit union, or other financial institution may be a prerequisite to becoming a consumer or commercial loan officer. You can start by working as a bank teller to gain familiarity with the bank and its processes and develop your customer service skills.

If you want to become a mortgage loan officer, you will need to complete some additional steps (which will be outlined in the next few sections).

  • Personality. While certain personality traits or interpersonal skills are not required, certain ones might come in handy.

For instance, extroverted people who tend to enjoy working with people and answering their questions might enjoy working in this profession more than those who prefer to be on their own.

Loan officers also benefit from the ability to demonstrate patience, work under pressure, and manage a number of different tasks with varying deadlines at once.

Additionally, if you pay close attention to detail and have great organizational skills, you will probably like this job.

So if you want to pursue consumer or commercial loan lending, you now know what you’ll need to do.

But if you would rather provide mortgage loans, read on for the additional steps you’ll need to take.

  1. Complete the pre-licensing requirements

Completing pre-licensure coursework is an essential component of becoming a mortgage loan officer.

Head to the Nationwide Multistate Licensing System & Registry (NMLS) website and create an account. The account set-up will give you an NMLS number, which you’ll need to continue the process.

The NMLS is responsible for registering and tracking mortgage loan officers across the country, and its website lists the approved providers for the coursework you’ll need to complete, along with contact, fees, and registration information.

While the requirements for pre-licensure education hours and topics vary by state, there are some commonalities. For instance:

  • Expect to spend at least 20 hours completing the required courses. The NMLS mandates the completion of 20 hours for licensure, but your state may require more.

  • Depending on the course provider, in-person and online options are available.

  • Your attendance and completion will be verified and submitted to the NMLS.

  • Course topics traditionally focus on federal law, ethics, nontraditional mortgage lending, and additional education as determined by the state.

Once your pre-licensure coursework is completed and your attendance has been verified, you’ll be ready for the next step.

  1. Get your license and pass a background check

Now it’s time to look at getting your mortgage loan originator (MLO) license. Once again, check to see whether any extra or specific licensing requirements exist for your state.

The SAFE Mortgage Licensing Act of 2008 was created to protect potential homebuyers and decrease the occurrence of fraud. Part of this act mandates that a potential loan officer must pass a national exam from the NMLS.

The SAFE MLO exam is available in-person or online, depending on your area and your preference. It generally covers the different areas found in your coursework.

You can expect to pay a fee when you schedule the exam.

There are both national and state components for the SAFE MLO exam. If you plan to obtain licensing for multiple states, you’ll need to complete a separate component for each state.

There is no time limit for the exam. You will need a score of 75% to pass, but you’ll have opportunities to retake the test if needed.

You will then be asked to undergo a criminal background check. Your credit report will also be collected during this time.

Once you’ve passed the exam and background check, you can apply for both an NMLS license and a state license. There will be additional regulations and separate fees for each of these.

Once you have your licenses in hand, you will be ready to start your career as a mortgage loan officer.

  1. Maintain your license

As you get started on your new career, remember this step. Once you have obtained your licenses, you will be responsible for maintaining them.

The NMLS has certain requirements for maintaining your MLO license. Be prepared to:

  • Renew your NMLS and state license each year. There is a separate fee for each of these that varies by state.

  • Maintain up-to-date personal information, including the best methods to contact you.

  • Keep your current employer up-to-date.

  • Complete continuing education relevant to your field. The NMLS requires mortgage loan officers to complete at least eight hours of continuing education coursework before renewing their license each year.

Your state may have additional requirements, so be sure to check those as you approach your renewal due date.

  1. Search for your next job

Congratulations on making it this far!

You may have some experience working in a financial institution. You might have obtained your MLO license.

At this point it’s time to start looking for your first job. You can start the application process by creating a resume that showcases your skills, talents, and abilities.

Then, check the Jobcase job board, which offers specific listings of relevant opportunities in your area. Apply for jobs that best fit your skills, abilities, preferences, and needs.

Once you schedule an interview, practice responding to potential questions to help you get ready.

  1. Gain experience

Once you start your job as a loan officer, expect the learning curve to continue. While you may have learned a lot from your previous experience or coursework, you’ll still have more to learn from your colleagues and the job itself.

Don’t be afraid to ask questions or to ask for help if you need it.

And don’t forget to add any new experience or skills you gain to your resume.

Ready to become a loan officer?

Now you know the steps needed to get started with your new career as a loan officer.

You are the right age, have your high school diploma or equivalent, and are interested in a career involving customer service, organization, and attention to detail.

And you know which types of loans most interest you.

You even know where to start looking for your first job. Jobcase offers not only up-to-date job listings in your area but also other resources. You can explore new job options, find connections, and discover even more hiring tips in our Getting Hired Resource Center.

If a career as a loan officer sounds like the right fit for you, don’t wait. Get started today!

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