If you’ve got an interest in the world of finance and/or banking with customer service skills to match, becoming a loan officer may be a viable option for your next career move. This role is highly focused on sales goals as well as consultative relationships with business or individual customers, so if you’ve got a highly-attuned eye for detail, a desire to help others fulfill their dreams and want to make a great salary doing so, keep reading. In this article, we’ll discuss the job responsibilities of a loan officer as well as salary and commissions, along with a list of steps to follow to become a loan officer.
What does a loan officer do?
A loan officer is the first point of contact for borrowers who want to apply for a loan from a bank, credit union or other lending institution. The loan officer will analyze and process loan applications for approval and originate the acceptance process. Also referred to as loan originators, these finance professionals work for financial institutions to find the best solution among a wide range of lending products for individuals and businesses. In addition to reviewing eligibility for funding, a loan officer will also school applicants and borrowers on the details of borrowing money as well as provide consultation and support for questions relating to the process. The products they work with can include personal and business loans, lines of credit and mortgages.
As lending professionals, loan officers must be well-educated and trained in the various lending products offered, as well as have a fully comprehensive knowledge and understanding of regulatory guidelines for the banking industry, company policies and all required paperwork. These financial professionals must have at least a bachelor’s degree and are urged to obtain additional credentialing.
Related: Your Guide to Careers in Finance
Easily apply to jobs with an Indeed Resume
Do loan officers make a commission?
The income of a loan officer depends largely on whether their employer pays a flat salary or has a commission-based structure in place. As a sales-based role, the general rule is that you can make more commissions in situations in which you’re generating your own leads. The difference can range from 0.2% to 2% of the total loan amount, again depending on the employer. Additionally, loan officers can earn incentives for reaching certain thresholds or selling certain products.
Average commission: $24,000 per year
Related: Learn About Being a Loan Officer
Loan officer average salary
Many loan officers are paid a salary or hourly rate, and others earn commissions and incentives on top of a lower base salary. Wage structures vary depending on the employer as well as the loan officer’s job performance (how many loans you close). Other contributing factors include:
- Education: Most employers will require their loan officers to hold at least a bachelor’s degree, with some preferring a master’s in finance or economics.
- Credentials: Certain types of loans require originators to hold special credentialing, such as the MLO, or mortgage loan originator license. These credentials often require coursework and exam to be completed successfully, as well as a clean background and credit check. These credentials must be renewed annually.
- Experience: Your salary will increase with experience. Whether it’s getting an annual pay increase or closing bigger and more frequent commission-based products, higher pay comes with industry experience. Additionally, as your experience mounts, you’ll be eligible to be hired into higher-paying roles with more responsibility.
- Geographical location: Certain parts of the U.S. pay higher salaries due to the higher cost of living. As one could reasonably suspect, the highest salaries (and housing costs) can be found in New York, Mississippi and California, while some of the lowest wages in the industry are found in Louisiana, South Dakota and Hawaii.
- Size of employer: Larger institutions tend to have higher budgets for higher salaries. This comes into play when they’re seeking the most qualified candidates to fill important roles within their organizations.
This occupation is expected to trend upwards for the next few years, and opportunities can be found all over the U.S.
- National average salary: $80,818 per year
- Some salaries can range from $14,000 to $241,000 per year
Related: Learn About Being an Underwriter
How to become a loan officer
Following these steps can help you begin your path to becoming a loan officer:
1. Complete your education
Most loan officers need a bachelor’s degree, usually in the field of business, accounting, economics or finance. These degrees can prepare you for the duties related to being a loan officer by teaching you how to read financial disclosure statements, analyze individual and business finances and have a basic understanding of accounting methods and principles.
2. Obtain credentials
Loan officers in the United States must obtain NMLS credentials. Requirements for these credentials typically include pre-license education along with a clean background and credit report. You must pass a national exam called the SAFE MLO test, and individual states may require their own testing, as well. Mortgage loan officers must be licensed, holding mortgage loan originator credentials. This particular credential can be acquired after completing at least 20 hours of required coursework and successfully passing the exam. Clean background and credit checks are required before you’re issued this license, and it must be renewed annually.
Optional credentials can include Certified Trust and Financial Advisor, Certified Financial Marketing Professional and Certified Lender Busines Banker, acquired through the American Bankers Association, and the Mortgage Bankers Association offers options for commercial, residential, executive and master mortgage bankers. These credentials can be obtained after the required coursework is completed, and renewal every two to three years requires continuing education credits. An annual fee also applies.
3. Gain experience
Most employers prefer that you have previous related work experience to be hired into a role as a loan officer. Some places to start could include jobs in customer service, sales, banking or other related skill-building positions. Other required training will be provided by your employer. Each financial or lending institution is likely to have its own set of training tools.
4. Hone your skills
Loan officers must maintain confidence in their abilities, effective working relationships and a high level of self-motivation. Additionally, this role relies on customer service, communication and sales skills. As you’re dealing with highly sensitive information in copious amounts, it’s crucial to remain organized and maintain confidentiality at all times.