Mortgage Loan Officer: What You Should Know
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A loan officer is usually the first person you’ll talk to when you shop for a mortgage loan, car loan, personal loan or business loan. However, a mortgage is one of the most complex and expensive loans most consumers take on, which is why every year the federal government requires ongoing education and a strict license renewal process for mortgage loan officers.
Learn what a mortgage loan officer is, how they work and how to choose the best person to advise you on your home loan choices.
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What is a loan officer?
A loan officer is responsible for advising, assisting and generating the paperwork needed to complete a loan application. A mortgage loan officer is employed by a mortgage lender, and specializes in residential home loans. They need to be well-versed in how each mortgage loan product works, and what it takes to get approved.
Mortgage loan officers are trained on how to analyze your income, down payment and credit history to choose the right loan program. Many also develop a basic understanding of how financial markets work, so they can lock in your mortgage rate at the right time to protect you from the economy’s ups and downs.
Read more about our current mortgage rates forecast.
What does a loan officer do?
A loan officer’s job description varies from lender to lender. However, most mortgage loan officers perform the following six tasks:
- Vet the information on your loan application. The uniform residential loan application (URLA) form is divided into nine sections with a lot of questions about every aspect of your financial present and past. It’s the loan officer’s responsibility to spot inconsistencies or missed questions to avoid delaying the mortgage process.
- Advise you on the best program based on your loan application. A loan officer is both an advocate and advisor, which means they must follow fair lending laws to recommend a loan program and interest rate with closing costs that fit your budget.
- Provide a detailed fee breakdown after your initial application and before closing. Loan officers must send you a loan estimate three business days after you apply for a loan and a closing disclosure three business days before you close, so you know your fees at the beginning and end of the transaction.
- Collect documents to support your loan request. A good loan officer knows what documents to request — whether it’s tax returns for a self-employed borrower or letters of explanation for a homebuyer with credit blemishes — to speed up and maximize your approval odds.
- Help you negotiate the best mortgage program terms. An experienced mortgage loan officer has expert knowledge of lending guidelines, closing costs and interest rates for a wide variety of loan programs. They answer questions about different types of mortgages and explain why their recommendation is a good fit for you.
- Track deadlines and help you close your loan. Loan officers keep an eye on important milestones to ensure you close your loan on time when you’re buying a home. They’re also vigilant about your mortgage rate lock expiration date, so you avoid any extension or relock fees.
It’s pretty common for real estate agents to refer their customers to loan officers they’ve worked with before. Communication is critical: A missed deadline could cause a seller to cancel a contract or cost you money if you have to extend your rate lock or closing date.
A good loan officer will provide your real estate agent with mortgage processing updates regularly. A solid real estate agent will keep your loan officer informed of any changes to the contract (like seller-paid repairs or closing cost credits) and keep track of contract timelines.
Mortgage broker vs. loan officer: What’s the difference?
A mortgage broker is a licensed financial service provider that works with multiple lenders. They act as an intermediary between the borrower and several lenders to find the best interest rates and loan programs. The mortgage brokerage company doesn’t actually provide the loans, however.
A loan officer typically works for one lender, which limits them to the products their employing lender offers. They may work for a mortgage bank, credit union or institutional bank, and their employer can provide mortgage funds directly to a borrower.
You may not know what type of lender you’re working with unless you ask. A mortgage broker is your best bet if you have complicated tax returns, bumpy credit or don’t fit into the standard cookie-cutter loan guideline box. A loan officer is a good match for borrowers with excellent financial profiles who have narrowed down their lender choices, or those who need down payment assistance.
How do I pick the best mortgage loan officer near me?
There are many different ways to choose a loan officer that meets your mortgage needs. Before you start your search, here are eight tips to make the process easier.
1. Ask a friend or family member
If someone you know recently bought a home and had a good lending experience, ask them to pass on the loan officer’s name and phone number to you.
2. Use an online lender
Many lenders offer websites with mortgage and homebuying information to get you acquainted with basic terminology. Most offer an online mortgage application link where you’ll be connected with a loan officer once you complete the application.
Learn more about our picks for the best online mortgage lenders.
3. Get a referral from your real estate agent
Real estate agents often work with “preferred” loan officers who have a reputation for reliably closing loans on time. Some real estate companies station an in-house loan officer in their offices to prequalify their buyers before showing homes.
4. Ask a housing counselor
Check the U.S. Department of Housing and Urban Development’s (HUD) website for a list of housing counselors in your area. HUD-certified counselors may be able to recommend a local reputable lender.
5. Go to your local bank
Most banks offer home loans, and some even offer lower interest rates if you keep a significant amount of cash on deposit. Loan officers generally work in bank branches, making it convenient to meet them while you’re doing your regular banking.
6. Find a local mortgage bank or mortgage broker
If you Google “mortgage banks near me” or “mortgage brokers in my area,” you’ll probably find plenty of mortgage company and loan officer websites to choose from. Mortgage brokers may even have access to special non-qualified mortgage programs for unique credit or income challenges.
7. Have questions prepared for each loan officer you meet
Besides asking the obvious questions about getting the best rates and fees, have a list of questions handy to get a feel for the loan officer’s experience and knowledge. You’ll learn a lot about the loan officer by asking:
- How much experience do you have? A loan officer with years of experience can be a great ally if you have a rocky credit history or complicated tax returns. They know how to handle the communications between all the parties involved in your loan closing to ensure a smooth process.
- What are your work hours? Homebuyers often look at homes after work and on weekends. You need a loan officer who’s easy to access, especially if you live in an area where real estate is booming. You may need an after-hours mortgage preapproval to compete; most sellers won’t even consider a purchase offer without a preapproval attached to it.
- How will we be communicating during the loan process? Texts and emails are great for quick status updates. However, loan officers should be available by phone if something urgent arises or you need to talk through questions about your mortgage.
- Why should I choose your company? Look for answers beyond low rates, competitive costs and great service. Special features like 14-day closings, rate locks before you’ve found a house or special down payment assistance programs may give you a leg up on other homebuyers if there’s fierce competition.
8. Meet at least three to five different loan officers
LendingTree research has shown that borrowers who shop with at least three to five mortgage lenders typically save thousands of dollars on their loan costs. Make sure you get along with the loan officer, though, since you’ll typically work with them for a month or two.
Frequently asked questions
A mortgage loan originator, or MLO for short, is the regulatory name for a loan officer. You can check a loan officer’s license status by entering their six-digit NMLS number into the Nationwide Mortgage Licensing System (NMLS) consumer access site.
Federal law requires that lenders pay loan officers a flat fee or a preset percentage of the loan amount for their services. Loan officers aren’t allowed to make an extra fee based on the terms of the loan, including the interest rate or loan type. The bottom line: It’s illegal for them to steer you toward a particular loan to earn a larger commission if the loan isn’t in your financial best interest.
A mortgage banker is a company that typically offers mortgage products for a single lender. They’re often called direct lenders because they lend you the money “directly” versus a mortgage broker that doesn’t lend money at all. The entire loan process — from application to funding — is usually handled in-house. Mortgage bank underwriters often have special authority to approve loans that mortgage brokers or institutional banks can’t.
The term loan officer may apply to anyone that helps you secure a loan. You may work with a loan officer for a car loan, boat loan, student loan or personal loan. A mortgage officer deals exclusively with home loans.