Steps to Become a Loan Officer

how to become a loan officer

Finance, accountancy, and general mathematics are three essential aspects of loan payment and approval. If you are active in these three subjects and find the number game intriguing, then a loan officer position could be a possible career choice for you. Loan officers go through applicants’ financial records, check their viability, and qualify for loans based on their credentials. They use underwritten economic principles to determine the individual or corporation’s loan eligibility. Know how to become a loan officer.

Career Outlook of Loan Officers

There are different divisions and subdivisions of loans. Loan officers generally specialize in one loan category in a large, multi-branched bank. This also depends on the loan applications each bank goes through every day. Types could include home loans, mortgage loans, student loans, personal loans, vehicle loans, jewelry loans, etc.

If you work in a small bank branch, you will typically look after all kinds of loan applications and process them. If the branch is big, you will look after mortgage or bank loan, while the rest will be taken care of by someone else.

Sales and marketing will take up a considerable part in your job duties, especially when working with smaller branches or banks. You will be required to bring in leads or convert leads into sales through marketing and interpersonal skills.

General Loan Officer Job Description

Loan officers have the following job duties:

  • Know all federal and bank lending policies and principles
  • Gain knowledge in different types of loans
  • Learn and understand the bank’s underwriting requirements
  • Counsel applicants on the right kind of loan
  • Collect necessary documents and financial records from applicants, such as payslips, employment records, income, and debt information, bank statement, etc.
  • Review information
  • Analyze and verify documents
  • Determine eligibility
  • Deny or approve loans
  • Market and bring in more clients

You must obtain license and certification (differs in states) to become a loan officer.

Loan Officers’ Salary

Every year, there’s a 10% increase in the number of loan officers jobs. The salary and commission also increase with it. According to the Bureau of Labor Statistics US, the average salary range of loan officers is between $69,030 and $76,270 per annum.

How to Become a Loan Officer in Steps

Depending upon the state you live in and the employer bank, the qualification required to become a loan officer differs. However, you must gain a bachelor’s degree, on the job training, loan officer license, and additional voluntary certifications to pursue this career.

Step 1: Gain Required Educational Skills

A high school diploma is the bare minimum requirement for this career. However, to become a commercial loan officer, you must complete an undergraduate degree, at least with majors like economics, finance, accountancy, business statistics, and business mathematics. A degree in finance will help you analyze business finance, read financial documents, and understand the principle and ethics of corporate accountancy.

Apart from these skills, you are also needed to develop and refine non-academic skills, such as excellent communication, decision making, problem-solving, and interpersonal skills. Additional knowledge in financial institution procedures and policies and loans will get your resume a few brownie points.

Most schools provide these skills as certification courses. You can take advantage of them while studying.

Step 2: Gain Considerable Work Experience and Training

The minimum work experience required to apply for a loan officer position is 2 – 3 years. Most banks want candidates to have previous experience in banking and finance. Experience is crucial for individuals who do not have a bachelor’s degree and certification. You can gain experience in a variety of settings, apart from internships. For example, you can find jobs in general banking, sales, and customer service.

One of the benefits of working in the banking sector is gaining on-the-job training.

Step 3: Acquire On-the-Job Training

All loan officer candidates, including you, must gain on-the-job training in loan processing, loan policies, federal regulations, customer service, and other skills. Some banks also provide salesmanship skill training and software training needed for mortgage underwriting. The type of exercise you receive will vary depending upon your experience and banking firm. Most big banks provide two types of exercise, informal and sponsored training.

Step 4: Obtain License

You can become a loan officer only after you obtain your license, especially if you want to become a Mortgage Loan Officer. You have to become a Certified Mortgage Loan Originator(1). To qualify for the mortgage loan originator license, you must complete 20 hours of education in the relevant field, go through a background and credit check, and clear an MLO certification examination. The examination paper will cover questions on state and national components about your state.

You will be rewarded with a renewable license upon clearing the examination. Renewal must be done every year, where the requirements generally include at least eight hours of continuing education credits and continuing practice as a loan officer.

[Also Read: How to Become a Mortgage Broker]

Step 5: Gain Additional Certification

While additional certification is not mandatory for loan officers, it will boost your job opportunities in the industry. The common types of loan officer certifications include:

  • Certified Trust and Financial Advisor (CTFA)
  • Certified Lender Business Banker (CLBB)
  • Certified Financial Marketing Professional (CFMP)

These certifications are offered by the American Bankers Association (ABA).

The Mortgage Bankers Association (MBA) also provide a range of certifications for mortgage loan officers in the fields like executive, master, residential, and commercial. However, you must have a specific educational background, number of years of experience, completion of continuing education, and clearing a test to become certified.

The answer to ‘how long does it take to become a loan officer’ is 2 – 3 years after under graduation or 3 -4 years after high school diploma. However, it can take another few months to meet the licensing requirements. All in all, you should be able to become a loan officer within 4 – 5 years at the maximum.