Loan officers are central to the economy. They promote, review and authorize loans that are often pivotal to their customers' lives and well- being. They help people buy their first car or purchase their first house. They help business get over the financial hump, and they help millions of young people pay for college.
Although most of us think of loan officers as the people who review our applications to borrow money, their role is actually much greater than that. They also promote their lending services to companies and individuals, and they help customers find the type of loan that works best for what they want to purchase.
Once someone has applied for a loan, the loan officer reviews the applicant's credit rating, loan history and bank accounts, and then uses a process called underwriting to decide if the loan is approved. This process often requires that applicants provide supplemental information and write explanations for certain events described in their credit report.
Once the loan is approved, the loan officer may market other services to borrowers.
Specialized loan officers include commercial loan officers, who work primarily with businesses; mortgage loan officers, who make loans for real estate purchases; and consumer loan officers, who loan money for large purchases or college. Loan underwriters specialize in evaluation loan applications, and loan collection officers work with customers who fail to make timely payments.
There is never just one path to any career, but according to the Bureau of Labor Statistics, these following steps can get you on the path to becoming a loan officer:
Finish high school.
Although most loan officers will need a bachelor's degree to get a job, some loan officers have only a high school diploma and receive on-the-job training that helps them fulfill their duties. So, whether you plan to go to college or to start working in an office learning to be a loan officer, the first step is to finish high school, making sure you take any classes in math, economics, computers and business available to you.
Get a bachelor's degree.
Loan officers can study any number of majors in preparation for working as a loan officer. Many study business, but others also major in accounting, finance and other business-related fields.
Get on-the-job training.
Companies generally provide both informal training as well as formal, company-sponsored training where future loan officers learn the rules, regulations and procedures during their first few months of work.
Hone your communication skills.
For many lenders, loan officers are the liaison between customers and the underwriter who evaluate loan applications. In this case, loan officers work with applicants to ensure their application is complete, accurate and successful.
Learn underwriting software.
These are the computer programs lenders often use to evaluate loan applicants. Although some lenders still evaluate loan applications manually, following set formulas or guidelines to determine whether to make a loan or what the terms of the loan will be, others use this specialized software. Knowing it looks good on your resume.
If you plan to be a mortgage loan officer, you'll have to get a Mortgage Loan Originator license. This requires 20 hours of coursework, and you have to pass an exam and submit to a background and credit check. These licenses have to be renewed annually, and some state require additional steps before granting a license. Loan officers can't have any felony convictions
The American Bankers Association and the Mortgage Bankers Association certify and train loan officers. Certification isn't required, but it will help you stand out when applying for jobs.
Develop your salesmanship.
Loan officers review loans but they also promote them to potential customers. This may involve contacting prospective businesses that may need a loan, or promoting your services among other salespeople, including Realtors and car salespeople.
Stay aware of changes.
The laws regarding lending change often, so a good loan officer needs to stay up on new regulations, such as those that resulted in the wake of the Great Recession.
Like most careers, becoming a loan officer requires more than just earning your degree and certification. To find out what makes a really great loan officer, we spoke with Don Frommeyer, CEO of the National Association of Mortgage Brokers.
Q: How do you know if you will enjoy being a loan officer?
That's the million-dollar question. You have to have a love of numbers and the ability and willingness to help people. I just closed a loan last week that took seven months to put together. So you can't be easily discouraged. Is it an easy job? No. Can anyone do it? Not really. The average age for a loan originator is 54, so there aren't a lot of people getting into the business. Those who do, though, find it to be very rewarding. I can't think of any other job I would want to do.
Q: What are the characteristics of a great loan officer?
Patience. Optimism. You can't get discouraged when people say no. You just have to be persistent. You might go to a real estate office for five months without getting a referral, and then you'll get one and then another and the next thing you know you're getting three or four loans a month.
Q: What are the biggest challenges facing loan officers just starting out in the profession?
It's not a 9-to-5 job. You sometimes have to work at night, and you have to be available to take calls at any time. Getting licensed is challenging, too. It takes six to eight weeks, take a 20-hour class, and pass a 150-question national test. You have to love all the work you have to do to get here, and you never really stop learning. Loan rules in each state are different, so if you are going to loan in different states, you have to stay up on all the changes.
Q: What is the job market like for loan officers?
The job market is really wide open. There are a lot of openings for loan originators. Everyone is excited because you can make some money in this job, but you can't be lazy or sit back and relax after a good month. The people who get the jobs and stay in the field are those who work hard, promote themselves and stay abreast of all the changes taking place in the field.
- Bureau of Labor Statistics
- Mortgage Bankers Association
- American Bankers Association
Program outcomes vary according to each institution's specific curriculum, and employment opportunities are not guaranteed.