What is a Mortgage Loan Officer?
A mortgage loan officer, also known as an MLO, is a licensed representative of a bank, mortgage company, or other financial services organization that is responsible for helping prospective borrowers secure the correct loan product for their financing needs. They assist homebuyers through every step of the mortgage loan process from application through closing.
Some of the Day-to-Day Responsibilities of a Loan Officer
In most instances, MLOs are as much salespeople as they are advisers. In fact, much of the daily duties of an MLO involve prospecting to increase their clientele. They do this by connecting with real estate agents and other professionals in the industry, as well as prospective homebuyers. Because the mortgage industry offers a range of types of loan products (e.g., VA, FHA, etc.), MLOs may even get referrals from other MLOs who have clients needing special assistance. Although the sales aspect of the position is significant, there are other duties that make up the day.
Mortgage loan officers are heavily involved in the processing of loan applications. They are responsible for researching the applicant’s creditworthiness and financial status, and verifying the myriad documents required for loan approval. If something is missing or more information is needed, it is the MLO’s duty to contact the applicant. As the process progresses, MLOs also collaborate with underwriters to ensure that the loan is coming along smoothly.
At closing, the mortgage loan officer should make an appearance. In fact, studies show that when MLOs do not attend the loan closing, client satisfaction numbers decrease. During closing, the mortgage loan officer facilitates the transfer of the property, explains the final loan terms, fees, closing costs, and answers any lingering questions that the new homeowners may have.
In addition to these duties, mortgage loan officers also answer questions from both clients and prospective clients about loan products, requirements for applying, and other general inquiries that may arise.
A Very Good Salary Range
Compensation is always an important consideration when choosing a career. Being a mortgage loan officer is known to be financially rewarding. According to Indeed.com, the average base salary per year for a loan officer in the U.S. is over $186,000. By all accounts, that is a desirable salary. However, many loan officers are paid a combination of base and commission as a part of their total compensation package.
Commission rates can vary with larger banks offering a salary and a small percentage of the closing amount of the loan. Some smaller mortgage brokers may work for 100% commission and earn their compensation from certain fees or points. Typically, MLOs earn 1% of the final loan amount and what they’ve negotiated with the brokerage. For example, on a $500,000 loan, 1% would be $5,000. If under the compensation agreement the MLO will get 80% of the brokerage fee, they will be paid $4,000.
As with many industries, the more experienced you become, the more money you can earn.
A Great Work-Life Balance
If work-life balance is important to you, a mortgage loan officer is a great career. Unlike physicians who may be on-call or teachers who often have after-hours obligations, MLOs can work regular daytime hours. Another benefit, especially post-pandemic, is that many MLOs have opted to work remotely from their home offices. Although it is recommended that these professionals continue to occasionally schedule in-office or face-to-face meetings with clients, and connect in-person with other industry colleagues, the basics of the position can be completed at home.
Job Security
People will always be interested in buying a home. No matter what the economy does, the market will have enough prospective buyers to ensure that the mortgage lending industry has enough clientele to sustain itself. Further, mortgage lending is not limited to traditional home loans – there’s also refinancing, home improvement loans, and commercial lending. As long as there are people who need funding, loan officers will be in demand.
Good Chances to Move Up the Corporate Ladder
Mortgage loan officers have an array of career opportunities beyond origination. Although highly successful MLOs may not find it feasible to try to climb the corporate ladder, the ability to move into senior management positions is always a possibility.
Another rung that MLOs may aspire to is moving to a division or financial institution that handles loans with a larger scope. For example, a mortgage loan officer in retail mortgage banking may choose to move into small business lending where the loan amounts can be much larger than residential mortgages.
And finally, being an MLO is a good segue into the banking industry at large. The skillset that mortgage professionals develop is a good backdrop for risk management, credit analysis, corporate or investment banking, and other more complex finance roles.
Entrepreneurial MLOs may explore owning their own brokerage or mortgage company in the future.
So, is it a Good Idea to Become a Mortgage Loan Officer?
Everyone has their own list of must-haves when it comes to deciding their career path. Being an MLO offers the opportunity to help people navigate one of the most important purchases they will ever make, give them advice that they’ll need long-term, and even help them fulfill their dream. If that weren’t enough, the salary potential and work-life balance makes the job even more desirable.
If you’re interested in starting your career as an MLO, come see how The CE Shop can help!
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