Last Updated on July 8, 2022 by Luke Feldbrugge
What does a mortgage loan officer do? Simply put, a mortgage loan officer will gather and review their clients’ financial information and documentation to determine if their client is eligible for a mortgage home loan. They are required to follow all federal and state lending regulations during their evaluation process in determining eligibility. Do they take mortgage loan officer training? Is it required to have a mortgage loan officer license? More importantly, what does a mortgage loan officer do for me? Let’s unwrap this for you.
Mortgage Loan Officers are Trained and Licensed Professionals
The basic requirement is they must be 18 years old and have a high school diploma or GED, but the National Mortgage Licensing Service (NMLS) requires mortgage loan officers to take certain course work for pre-licensure to ensure they understand what the job is all about. The course takes twenty hours to complete, and it includes subject matter like:
- Federal law and regulations
- Business ethics; covering subjects like fraud, fair lending and consumer protection
- Training related to lending standards and mortgage origination
The actual training and licensing requirements are different state to state, so the next step is to get a valid mortgage origination license. These licenses are issued by state agencies and each state has their own guidelines to receive a license.
They must also pass the SAFE MLO test. The SAFE (Secure And Fair Enforcement) test measures their knowledge of federal and state mortgage lending laws. Every mortgage loan officer must be registered with the NMLS and use their unique NMLS identifier number. Please keep this in mind if you’re shopping around.
Core Job Responsibilities
- Collect and evaluate client’s financial information
- Estimate client’s creditworthiness through financial analysis and client interviews
- Consult clients on loan options and help them determine best option for their personal scenario
- Issue pre-approval letter for homebuyer clients to begin their home search
- Handle the preparation and submission of their client’s loan application
- Resolve problems throughout application process
- Ensure compliance with all federal and state regulations, privacy laws and confidentiality policies
What Does a Mortgage Loan Officer Do to Assist Clients
Inform About Mortgage Loan Types
Part of what a Mortgage Loan officer does is to inform a home buyer or a client who is refinancing whether they qualify for particular types of loans and explain why or why not each loan type is an option based on the loan’s requirements. Here’s a list of the main mortgage loan types:
– FHA mortgage
– VA mortgage
– USDA mortgage
– Conventional mortgage
– Jumbo mortgage
– Interest-only mortgage
INTERESTING FACT: Homes for Heroes mortgage loan officers are well informed on any local, state or federal money saving opportunities that heroes may qualify to receive when taking out a mortgage, buying a home or refinancing. If you would like to speak with our local mortgage specialist to discuss what you’re looking to do and how they can help, simply sign up on our website and our specialist will contact you and answer your questions.
Calculate Your Debt-to-Income Ratio
A mortgage loan officer will specifically look at your debt-to-income ratio to help determine how much you can borrow based on your ability to make monthly payments and repay the money. Your debt-to-income ratio (or DTI) is calculated by adding up all your monthly debt payments (credit cards, car loan, student loans, etc), divided by your gross monthly income (before taxes and other deductions are taken out).
Pull Credit Reports and Credit Score
The mortgage loan officer will pull your credit reports from the three credit bureaus (Equifax, Experian and TransUnion) and your credit score. Your credit score is a number that rates your credit risk and its calculated by credit companies. The higher your credit score, the more likely you are to pay the money back in a timely manner. The information that affects your credit score includes:
– Length of credit history (the longer the better)
– Types of credit accounts (mortgages, car loans, credit cards, etc)
– Payment history (consistently paid on time?)
– Outstanding balances (not excessive when compared to your income)
– Pending applications for new credit accounts
Provide Pre-Approval Letter
This is a big one for the current market. For the most part, sellers are not even entertaining a potential home buyer’s offer without a pre-approval letter. The primary benefits of getting a pre-approval letter include:
– Provides you with a good idea of how much you can offer a home seller
– Provides a home seller more confidence in your offer
– Helps to speed things up and get to closing on your home faster
Application and Loan Processing
There are many numbers to crunch and a good amount of administrative work to be done during the mortgage process. The mortgage loan officer will essentially complete the mortgage application following an accepted offer, manage the administrative work during loan processing and during the underwriting approval process. The mortgage loan officer will work closely with your real estate agent to remain informed with how the application process is proceeding and keep it moving along to get everything done before the close date. This all needs to happen in order for you to close on your home with the appropriate paperwork. Most mortgage lenders will need at least 30 days to complete this process.
Require an Unbiased Home Appraisal
Whether buying a new home or refinancing an existing mortgage, all mortgage loan officers will order a third-party home appraisal during the loan approval process to determine an unbiased assessment of the home’s fair market value. When attempting to purchase a home, this helps to tell you whether the offer you submitted to the seller is appropriate given the home’s condition, location and features.
Assembles Proper Paperwork for Closing
What does a mortgage loan officer do on closing day? To sum it up they will have all of your paperwork assembled, accurately filled out with all of the proper information, and ready for signatures to close the deal!
INTERESTING FACT: Mortgage Loan Officer vs Loan Originator
A mortgage loan officer and a mortgage loan originator essentially do the same things for their clients. They assist their client through the mortgage application process and ensure everything is buttoned up for their client’s closing in a timely manner. But, a mortgage loan originator can also be the actual entity or institution (lender) that initiates the loan and actually lends the money.
Our Mortgage Loan Officers and Originators Save Heroes Money
Homes for Heroes mortgage specialists are NMLS certified professional mortgage loan officers, originators and brokers who have chosen to join our program because they wanted to do something more for their local heroes. They wanted to give something back to the heroes who serve their community. Homes for Heroes mortgage specialists reduce their lending fee for local heroes, and on average this saves you $500. In addition, if you choose to work with our local real estate specialist to purchase a home, on average you can save $1,700. At Homes for Heroes, we along with our specialists, do this for one reason. To thank you for your service to this country and our local communities. It would be an honor to assist you with your home buying or refinancing needs. Sign up today if you’d like to speak with one of our mortgage specialists about starting your new home search or to begin your refinancing process, get pre-approved and eventually save good money after closing.