How to Become a Loan Officer
90Job Can Be Very Rewarding Financially
Loan officers are employees of financial institutions whose job it is to make loans to customers. Having a college degree does not hurt but it is generally not a requirement for the job. What is needed is the ability to deal with customers, the ability to know the lending institution’s current lending guidelines and interest rates, know and follow the legal rules and regulations concerning lending and be able to evaluate a prospective borrower’s ability and willingness to repay the loan.
Most lenders generally require a high school education as a condition for employment. A college education is helpful and may help one to rise faster in the field but it is usually not a requirement. Experience is what really counts in this field. Generally, a person desiring to become a loan officer will start in the customer service area of a financial institution such as bank teller, collections clerk (calling existing borrowers who are behind in their payments and getting them to bring their accounts current) or as a loan representative who helps applicants initiate applications for small loans such as personal loans and credit cards or even larger loans.
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Loan representatives are generally sales people who take applications and other people or computers make the decisions as to whether or not the loan will be granted and then generate the paperwork which the loan representative will then have the borrowers sign. The loan representative may do some preliminary screening to weed out those who obviously don’t qualify, but the real decisions are made elsewhere.
Moving up the latter in this career field, we have loan officers who specialize in auto loans, home mortgage loans and commercial business loans. These, much higher paying positions, are first and foremost, sales jobs in which the loan officer is expected to actively seek and solicit borrowers for business. In the case of automobile and home loans this means working with new and used car salesmen for referrals of car buyers. In the case of home mortgage loans this means working with real estate agents for referrals of home buyers. In the case of commercial business loans this involves the loan officer developing relationships with businesses to encourage them to work with the loan officer when the business needs to borrow money.
Most loan officers in this category are either paid a salary and given a quota to meet in terms of dollar volume of new loans or are paid on commission with their pay being a percentage of the loan business they generate. In addition to sales, the loan officer must collect and evaluate information about the borrower’s ability to repay the loan and the quality of collateral (car, home, business assets being pledged as security) and determine whether or not to make the loan. Sometimes the loan officer is empowered to make the decision as to whether or not to make the loan (in these cases the loan officer is given authority to make loans up to a certain dollar amount without approval from others) and in other cases the loan officer has to submit loans to a loan committee for approval and be prepared to argue the case for making the loan to the committee.
If you are looking for a challenging job that involves working with and helping people as well as has the potential, at the upper end of the profession, for unlimited income then this career is for you.
How to Become a Loan Officer in the News
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I am just looking for some one to help me get started on how to be a loan officer and the different programs that are out there. I live in washington if you can answer any of these questions
Informative HUB. I have been in the mortgage business for a number of years and it can be challenging (especially these days.) It is also a very rewarding career in the way of helping people make sound financial decisions and advising them about one of the most important investments in their lives.
Kelsea, thank you for visiting my hub and for your comment. The best way to become a loan officer is to get a job in a bank. If you have a college degree you can start as a management trainee and apply for the loan department where you will probably begin in an area like collections or loan servicing. If you don't have a degree you can apply for a job in a bank as a teller or entry level position in another department (although teller would probably be best as that is a customer service job with customer contact and customer service and dealing with customers is a big part of a loan officer's job.
Whether you have a college degree or not, take advantage of the training the bank will offer (free but will have to be done on your own time) through the American Institute of Banking as this will both prepare you for loan officer and other positions in the organization (or another as you may want to continue looking for loan officer jobs outside as well) as well as show your current and potential future employers that you are a self-starter and have ambition. These are qualities they like in all employees especially in loan officer positions as you will be expected to go out and bring business in rather than simply waiting for customers to come in and apply for loans (finding customers is very critical in areas like mortgage banking and other specialty lending areas where your pay will be commission based). Good luck.
Considering what is happening in the industry right now, I wouldn't want to enter it just yet. I would expect serious job cuts for a coming couple of years at least, and people with less experience are mosy vulnerable...
Misha, Thanks for your comment. You are absolutely correct in that this is probably not a good time to become a loan officer, especially a mortgage loan officer. In addition to layoffs, many loan officers are paid all or mostly on commission. With housing sales already low and falling and lenders becoming very strict in approving loans there won't be many opportunities to earn commissions in the near future and the ones most likely to continue working and being paid in this industry will be those with the experience to know which potential applicants are likely to be approved and which will not as well as, and probably more important, those with extensive contacts who can refer the dwindling pool of borrowers to them.
However, this downturn, like others in the past, will not last forever and the market for loans and loan officers will improve. Those who still want to get into the field should look for a job with a bank or other large lending organization in their loan servicing department, especially the collections division of that department. Not only are these jobs usually salary rather than commission based but they are also great positions in which to learn the business. When the market returns, and it will, such people will be in a position to fill loan officer positions as they quickly become available.
Thanks again for visiting and for your comment. Chuck
Very good information. It is a pity that thay don't spend time with their clients after brokering a loan.
Nice informative Hub, Chuck. I am involved with publishing information on home mortgages online. I was wondering since you said that your specialization as a loan officer involved sales, where do you find most of your home mortgage prospects? Is it mostly through real estate agents, or do all your leads come from them?
Marc - thanks for visiting my article and for your comment. I think that you misunderstood my reply (4 comments above yours) about prospecting for clients. First of all my banking experience took place 20+ years ago when most loan officers were salaried employees (although they were often given quotas to meet) with banks or savings and loan associations. My involvement with the mortgage lending process was mainly in providing PC and mini-computer systems and programming support as well as loan underwriting, closing and secondary market sales support. I was never directly involved with customers directly.
However, I did work closely with the loan officers and still have contacts in the business. From my experience working and associating with mortgage loan officers, the primary way to get customers, then and now was develop relationships with realestate brokers in order to get referrals from them. In addition to this I know that loan officers, like other people in the sales area, actively participate in networking events, build networks with others, besides realestate brokers, such as insurance agents, who can also refer clients. In the refinance area many also resort to telephone solicitations (calling previous clients as well as cold calls) and direct mail to both previous clients and cold calls. Basically, it is all about sales.
I tried it last year and was very busy. I had a very good mentor also and worked for Equity Bank, but then resigned when he went to Amerisave. Unfortunately, Amerisave would only hire me as an "on the road" employee, not an at home officer. It was quite interesting, but obviously, it was just the wrong time to enter the industry.
Hi, this is a very valuable hub with great piece of information, but the only piece of infomrmation missing, or I think it shold have been is the mention of some good accreddited online classes on the innternet for people like us. Do mention some names on good onnline Real Estate Courses if you can.
Shawn, thanks for visiting my Hub and for your comments. The only loan officer training courses that I am aware of, both traditional classroom and online, are usually offered by trade associations like the American Bankers Association (ABA) and are usually only available to employees of member lenders. There are some community colleges which offer courses in lending but you would have to search to find one. A Google search for online loan officer training courses might yield some courses of this nature.
As to realestate courses, some of which would be of help to people interested in mortgage lending, these are usually subject to regulation by the various states. The last time I checked for an online realestate broker license course for a student I discovered that, in Arizona at least, they are not allowed as the requirement is that students wishing to sit for the Arizona realtors license exam must have first completed an approved realestate training course taught in a classroom located within the borders of the state of Arizona. This is obviously intended to help limit the number of realtors by preventing out of state realtors come in, pass the test and go to work immediately.
Though these courses are available online as well as in our cities but getting a job in this time of crunch is something ompossible task of you really can not associate yourself with some attorney or law firm or say lending organization using your contacts. But again this job prospects as a hot job are not going to be long enough I think . What do you say ?
This would actually be the best time to get in the market in any of the challenged fields - real estate agent, loan officer, etc. because the market will come back and while you're learning you can be building a list of customers and learning how to bring value to yourself and others. And when the comeback comes - and it will - you're y
This is actually the best time to get into this market because you have a little longer learning curve while you position yourself to be the "GO TO" person in the marketplace and when the market comes back - and it will - you're the big Dog on Campus!
I would have to agree with most of you except for the comment about being a tough time to enter the industry. Yes, the market is down and the real estate market has decreased its volume since this economic downfall, but that also means people are looking for professionals that can help guide them though the process and help to feel comfotable about buying the home of their dreams. It is also a great time to buy, so a good target is to try and get some investors that have the upfront stability and income to make purchases at much less prices than the old market value....I would encourage everyone who is interested in becoming a loan officer to pick up a good book and begin the training....This is perhaps one of the most rewarding jobs out there, and the sky is the limit when it comes to income....
Chris, thanks for your comments. I totally agree with you in all of your points but take a little exception to where you said "...except for the comment about being a tough time to enter the industry."
My point above was that, in the midst of a housing market collapse, this is not a good time for a person to simply jump in the business as a loan officer. At the end of your entry you state "...I would encourage everyone who is interested in becoming a loan officer to pick up a good book and begin the training..." and this is the point I was trying to make, namely that now is an excellent time for people to get into the industry and start training and learning the job. My main point was that such people should seek out jobs in the industry that will prepare them to become a loan officer while providing them a regular pay check while they learn. Then, once they are prepared they can move into a market on the upturn with the skills needed to survive and prosper on a commission only income.
Thanks again for contributing your good advice.
markion says:
2 years ago
Informative Hub.. it does seem like a rewarding career but also seems as though it requires hard work!