Owning a home is the American dream for many. According to the National Association of Realtors (NAR), 32% of home buyers in 2024 paid cash for their homes. However, for the other 68% of buyers, a mortgage is the only way to purchase property. Prospective buyers will typically need to work with a loan officer to secure a mortgage.
What is a Loan Officer?
An individual who works for a financial institution (such as a credit union or bank) and assists borrowers in applying for a loan is called a loan officer. Loan officers can also be referred to as mortgage loan officers because these are the most common types of loans they work on. However, they can also work on other types of loans, such as business loans, private loans, and more.
Depending on the type of institution they work for, a loan officer may be required to be licensed or registered. For example, mortgage loan officers must have a Mortgage Loan Originator (MLO) license.
What Does a Mortgage Loan Officer Do?
Applying for any type of loan, including a mortgage, is a complicated process that requires a lot of paperwork. A mortgage loan officer walks borrowers through the entire process and takes the following steps:
- Informs the borrowers of the mortgage loan options available to them.
- Screens the applicant to ensure they qualify for a mortgage and approves their application for consideration by the financial institution.
- Helps the borrower gather all the necessary documents for the application.
- Provides the borrower with updates as their application moves through the review process.
- Advises the borrower on improving their chances of approval if they’ve been denied.
- If the loan is approved, the mortgage loan officer takes all necessary steps to work with the seller’s representatives to complete the home sale.
Do You Have to Use a Mortgage Loan Officer?
Borrowers typically have two options when it comes to securing a mortgage: work with a mortgage loan officer or a mortgage broker. A loan officer is tied to a specific financial institution, so they can only offer options from that specific lender. Alternatively, a mortgage broker is an independent agent who can approach many lenders to secure the most competitive rate.
There are advantages and disadvantages to using a broker and a loan officer, so it’s essential to research and understand which is the best for you.
Even online financial institutions that use algorithms to screen through applications need to use a loan officer or a mortgage broker at some point in the process.
The Benefits of a Loan Officer
Some of the benefits of working with a loan officer are:
- They are an expert in their field and can offer advice on the best type of loan for each borrower’s unique situation.
- They can offer advice on how to get approved for a future loan when a client has been denied.
- They can answer any questions you have come up with during the application process.
- They handle the majority of the paperwork.
- They break down the fees and payment schedules you can expect so you feel financially prepared for your new mortgage or loan.
Do You Pay a Mortgage Loan Officer?
Yes, your fee for using a mortgage loan officer is rolled up into the total costs of securing a mortgage. A loan officer is usually paid a flat salary or a commission. Federal regulations don’t allow mortgage loan officers to receive payment based on the terms of the loan, as this would cause a conflict of interest.
How to Choose a Mortgage Loan Officer
There are dozens and dozens of financial institutions, so narrowing down to the right mortgage loan officer for you can feel overwhelming. Here are some steps you can take to select a loan officer:
- Ask friends and family for recommendations. Someone who has had a positive experience with their loan officer is one of the best ways to find someone great to work with.
- Ask your real estate agent. Your realtor deals with mortgage loan officers daily. They likely know a few people they’ve worked with who have been organized and successful in getting their clients the mortgage they need.
- Try your preferred bank. You don’t necessarily have to work with your bank for your mortgage, but there might be a benefit to trying this route. Your day-to-day bank already has a relationship and history with you. This familiarity may help to speed up the application process.
- Explore your options. Your home is probably the biggest purchase you’ll make, so you want to work with a professional who will make the process as easy and smooth as possible for you. You don’t have to use the first loan officer you speak with. Consider interviewing a few candidates to find the right person for you. Ask your candidates questions about their years of experience, credentials, approval rating, and current rates.
A Mortgage Loan Officer Helps You Secure Your Home
Purchasing your home is an exciting moment in anyone’s life. A mortgage loan officer or mortgage broker may be a necessary relationship, but it’s one that benefits you. A loan officer is an expert in their field and will guide you through the entire mortgage application process, from which type of mortgage to apply for to what paperwork to provide.
Find the right loan officer today, and you’ll have your partner in the mortgage process.
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