While there are key distinctions between mortgage loan processors and mortgage loan officers, they each contribute to the mortgage lending process in important ways. Mortgage loan processors focus on documentation review, compliance, and file preparation. Mortgage loan officers (aka mortgage loan originators) are client-facing professionals that nurture relationships and offer guidance throughout the loan process. Below, we dive into greater detail about the nuances of each role.
What is a Mortgage?
A mortgage is a loan that a buyer borrows to purchase a desired piece of property. The amount is paid for over an extended period of time, and generally includes some form of interest.
What is the Difference Between Loan Processing and Loan Origination?
Loan processing involves the steps required to collect and review information to complete the mortgage application. The focus here is on verification, accuracy, and completeness of the file. Loan origination, on the other hand, includes all activities required to facilitate the approval and funding of a mortgage loan. This journey often begins with pre-qualification and goes through application, document review, and underwriting before the borrower is approved and funded.
Why It’s Important to Know the Difference
It’s important that both borrowers and real estate professionals know the difference between the two.
Mortgage loan officers require a level of licensing that allows them to participate in certain activities pertaining to loan origination. Similarly, mortgage loan processors are prohibited from performing the duties of loan officers. So when borrowers have questions, they may unwittingly ask the loan processor for assistance that the processor is not legally able to provide.
To really get a handle on the difference, let’s dive in.
Mortgage Loan Processor
A mortgage loan processor performs the administrative tasks involved in the lending process. They work alongside a mortgage loan originator to ensure that a borrower’s financial profile is a good fit for the mortgage product they’ve selected. They organize documents and other information in the borrower’s file in accordance with the guidelines of the specific loan. This duty is important because it streamlines the underwriting process and helps prevent unnecessary delays due to incomplete files.
Loan processors also order and analyze credit reports, collect letters of explanation, examine payment histories, and keep track of the borrower’s mortgage process, including finding the home, making an offer, scheduling the home appraisal, and closing the loan on time.
Qualifications and Requirements
To become a mortgage loan processor, all you need is a high school diploma. Though, to really round your knowledge and stand out to future employers, it never hurts to pursue a higher education – preferably in finance, banking, or business.
You’ll also need to complete National Association of Mortgage Processors training, and then pass a test in order to get your license.
Skills and Traits Needed to Succeed and Excel
Being a great mortgage loan processor, like many professions, requires both hard and soft skills. Mortgage professionals can get pretty busy, so time-management skills and the ability to meet multiple deadlines are important.
Keep in mind that you’ll be client-facing, so some customer service aptitude is necessary. Of course, you’ll also need to stay abreast of the latest mortgage software and evolving industry standards, so being open to learning new concepts is another great trait to have.
Average Salary and Job Outlook
According to Salary.com, the average mortgage loan processor makes just under $43,000 per year. O
Mortgage Loan Officer
Mortgage loan officers, also known as mortgage loan originators, usually work in banks and other financial institutions and walk prospective borrowers through the mortgage lending process. They are knowledgeable about various loan products, which products are most suitable for their clients, and industry regulations.
Mortgage loan officers handle the initial application, analyze credit profiles, and even coordinate with realtors regarding the loan. If the borrower lacks certain qualifications, the mortgage loan officer may also counsel them on corrective steps they can take to get approved.
Qualifications and Requirements
To become a mortgage loan officer, you must be at least 18 years old and hold a high school diploma. While not required, a college degree in a financial or business field is recommended as it rounds out your knowledge and makes you stand out to future employers.
Mortgage loan officers must also:
- register through the Nationwide Multistate Licensing System (NMLS);
- submit to criminal and credit background checks;
- take at least 20 hours of pre-licensing education; and
- pass the national SAFE MLO examination.
Skills and Traits Needed to Succeed and Excel
Effective communication is paramount for mortgage loan officers. They must be able to clearly articulate and simplify complex financial concepts to clients. They must also have strong financial acumen. Understanding interest rates, credit scores, debt-to-income ratios, and other financial topics are a large part of the position.
Problem-solving skills are also necessary. Mortgage loan officers must be able to think critically and solve issues that may arise during the loan process. A skilled loan officer will be able to identify a problem, produce alternative solutions, surmount obstacles, and provide advice.
Attention to detail is also crucial. This meticulous approach to their work is necessary due to the sheer volume of paperwork and legal documentation required in obtaining a mortgage loan. Being able to avoid errors – or at least quickly identify and correct them –will help the process move forward more smoothly.
Sales ability is one skill that many people don’t think about for mortgage loan officers. They not only originate loans, but also market loan products and services. They should be adept at identifying leads and persuasive enough to compel prospective borrowers to apply.
Average Salary and Job Outlook
While earnings can vary based on state and employer, the overall job outlook for mortgage loan officers is positive. According to the Bureau of Labor Statistics, the average salary as of 2021 was $63,380 per year. Keep in mind that mortgage loan officers also generally receive some type of commission based on the amount of the loan.
Comparing Mortgage Loan Processor vs. Mortgage Loan Officer: Similarities & Differences
Both mortgage loan processors and mortgage loan officers play crucial roles in facilitating the mortgage loan process. Let’s take a quick look at the differences in work environment, compensation, and career advancement, below.
Work Environment and Schedule
Mortgage loan processors typically work in office environments. They are usually employed by banks, credit unions, mortgage companies, and other lending institutions. They work closely with underwriters, loan officers, and other internal team members. In general, they work regular office hours (Monday-Friday) for 40 hours per week. However, they may work overtime during peak periods.
Mortgage loan officers may have various workplaces. Some work for banks or other lending institutions and will go into a physical office every day. Others work remotely from their homes. Sometimes, they will have meetings with clients, real estate agents, and other industry professionals outside of the office. Their schedules also vary, as they tend to have more flexibility than mortgage loan processors. Because they are client-facing, they tend to work around their clients’ schedules. This means they may work later in the evenings, or on weekends.
Compensation and Career Advancement
Compensation and career trajectory are two particularly important considerations for any career.
Mortgage loan officers typically earn commission-based compensation in addition to a base salary. That commission is based off the loan amount and can vary depending on the organization’s structure. The more loans that a mortgage officer closes, the more they can earn.
Mortgage loan processors, however, are usually paid a fixed salary or hourly rate and do not earn commissions based on loan volume. Compensation for loan processors is generally more stable, though typically not as high as a loan officer’s.
While career advancement opportunities can vary from organization to organization, loan officers do tend to have greater advancement opportunities. This is due, in part, to both their licensing and the ability to build more robust business networks.
Loan processors, on the other hand, can progress to a senior loan processor position or other supervisory position within the processing department. However, generally, a more lucrative option is to pursue their MLO license and become a loan officer.
Which Career Should You Choose?
Which position should you pursue? That’s a question only you can answer. It’s important to choose the career path that will make the most of your individual skills, interests, and goals. You want to have a sense of fulfillment, continuous growth, and overall career satisfaction. The great thing about the mortgage industry is that you can explore different roles until you find one that suits you the best.
FAQs
How Do I Choose Between a Career as a Mortgage Loan Processor vs. a Mortgage Loan Officer?
Your career choice hinges on your personal goals. You may want to ease into the mortgage industry; if so, becoming a mortgage loan processor may be more feasible in the beginning. You can always pursue your pre-licensing training and take the SAFE MLO exam later on to become a loan officer.
What Does a Mortgage Loan Processor Do?
Mortgage loan processors focus on the behind-the-scenes tasks involved in mortgage lending. They review loan applications, organize supporting documentation, ensure compliance with underwriting guidelines, and get the borrower’s file for underwriters.
What Does a Mortgage Loan Officer Do?
A mortgage loan officer is responsible for interacting directly with borrowers and helping them throughout the application and approval process. They are the main point of contact for borrowers and offer guidance regarding different types of loan products, or corrective action needed to get a loan. They are also responsible for client acquisition.
How Does a Mortgage Loan Processor Differ From a Mortgage Loan Officer?
In short, mortgage loan processors are the administrative professionals who work behind the scenes to organize paperwork and get the file ready for underwriting.
What Are the Requirements To Become a Mortgage Loan Processor?
All you need is a high school diploma. Though, to really round your knowledge and stand out to future employers, it never hurts to pursue a higher education – preferably in finance, banking, or business.
You’ll also need to complete National Association of Mortgage Processors training, and then pass a test in order to get your license.
What Are the Requirements To Become a Mortgage Loan Officer?
You must be at least 18 years old and hold a high school diploma. While not required, a college degree in a financial or business field is recommended.
Mortgage loan officers must also:
- register through the Nationwide Multistate Licensing System (NMLS);
- submit to criminal and credit background checks;
- take at least 20 hours of pre-licensing education; and
- pass the national SAFE MLO examination.
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