What does a mortgage originator do?

Mortgage loan officers connect borrowers to home loans

When someone buys or refinances a home, there are a number of people who walk them through the mortgage loan process.

The mortgage originator (MLO) is a key part of this system. This person helps the buyer or refinancer choose a loan and understand all the rates and conditions associated with it.

In short, an MLO is the essential link between a borrower and his mortgage company.

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What is a mortgage originator?

Mortgage originators, loan processors, and underwriters are all part of a team of mortgage professionals involved in creating a home loan.

One of the most important people in the process is the mortgage loan officer. Or, as they have become more well known, a Mortgage Originator (MLO).

A mortgage originator typically works for a bank or mortgage lender and helps mortgage borrowers with the application process.

A mortgage lender can help you find the right type of loan, as well as the best mortgage terms for you.

What does a mortgage originator do?

Mortgage originators should have a thorough knowledge of lending products, banking industry rules and regulations, and the documentation required to obtain a loan.

“Loan officers assess, authorize or recommend the approval of loan applications for individuals and businesses,” according to the United States Bureau of Labor Statics.

It requires excellent interpersonal skills.

A good loan officer puts their clients at ease during the process, while also informing them of their decision.

Borrowing money can be a nerve-racking experience. A good loan officer puts their clients at ease during the process, while also informing them of their decision.

Mortgage loan officers also collect and verify all required financial documents from applicants.

They will use this information to determine if a mortgage borrower is qualified for a loan from a credit, income and asset perspective. They will also help borrowers decide what type of loan is right for them based on their finances and the purchase price.

The profession involves a lot of paperwork and logistics management throughout the loan process.

Do mortgage loan officers have to be licensed?

Before the housing crisis, mortgage originators did not need to be licensed.

Consumers today are much more protected when it comes to mortgages. All non-bank mortgage loan officers must now be licensed in the states in which they make loans.

If a loan originator is employed by a bank, an affiliate of a bank, or a credit union, they do not need to obtain a loan originator license.

For all other mortgage loan officers, a fairly comprehensive process is required to obtain a license.

  • Demonstrate financial responsibility, character and general suitability as a lender
  • Complete a minimum of 20 hours of pre-license training
  • Score of at least 75 percent on the NMLS written test
  • Submit fingerprints to NMLS for a national and FBI national criminal background check
  • Submit an accurate and complete personal history and experience document to NMLS which includes an independent credit report, as well as any information regarding administrative, civil or criminal findings in any jurisdiction

Mortgage licensing is overseen by the national multi-state licensing system, commonly referred to as “NMLS”. The NMLS licenses future MLOs that meet the requirements.

How Are Mortgage Loan Officers Paid?

Mortgage originators generally work on commission only and are not paid until the loan ends.

It can be a good thing for you as a consumer. This prompts loan originators to help an applicant increase their chances of approval.

Once a mortgage is approved and the loan is funded, the loan originator will receive a percentage of the total loan amount.

The percentage of commission that loan officers receive varies from one credit institution to another. But on average, loan originators receive around 1% of the loan amount in commission.

For example, if you buy a house for $ 250,000 and invest 20%, your loan amount would be $ 200,000. In this case, the loan officer who helped you go from application to closing could receive a 1% commission of $ 2,000.

What is the typical salary of a mortgage creator?

The average mortgage originator earns just over $ 63,000 per year, according to the US Bureau of Labor Statistics.

But remember – MLOs are usually not salaried, they are paid on commission. So a mortgage loan officer who makes a lot of loans in cities or high priced markets could earn a much higher salary.

That said, some new mortgage companies are removing the commission-based compensation model for loan officers.

Better Mortgage, for example, removed MLO fees in an effort to make lending more transparent to borrowers. According to Better’s estimate, a commission-free model ensures that loan officers always have the borrower’s best interest in mind.

How to choose a mortgage originator

Because a loan officer is a key player in the mortgage loan process, knowing how to choose one is essential to ensuring you get the best mortgage with the best possible experience.

In addition to assisting you with your loan application, a good loan originator will have a variety of skills.

With the right balance of industry knowledge, communication skills, and integrity, a mortgage lender can make the complexities of a mortgage much easier – and the process much smoother.

The best way to know that you are working with a good loan officer is to do some research on them or their business.

Even with all of the recent advances put in place by the Consumer Financial Protection Bureau (CFPB) to protect mortgage borrowers, it is still possible to work with an unscrupulous lender.

This is why loan officers with honesty and integrity are essential.

The best way to know that you are working with a good loan officer is to do some research on them or their business.

Fortunately, thanks to technology, it’s easier than ever to do a due diligence quickly.

A short amount of time spent online can tell you a lot. Check out social media and online review sites. You can learn a lot here because it is difficult for a loan officer and / or their business to avoid negative reviews.

While technology means that you hardly ever have to talk to a loan officer, you should. If you can’t meet your loan officer in person, suggest a Zoom meeting.

Since real estate agents and lawyers work with loan officers on a daily basis, they can be a great source of reference for finding a good loan officer.

By meeting with your loan officer in person or online, you will most likely be able to get a feel for their work ethic and determine whether or not you will work in a consistent manner.

Good loan originators usually work hard to develop new business opportunities where possible.

They will actively work to develop relationships with real estate agents and lawyers. Since these people work with loan officers on a daily basis, they can be a great source of reference for finding a good loan officer.

Be sure to check the rating of the company and the loan officer with the Better Business Bureau. Ask for referrals from past clients, read testimonials online, and most importantly, follow your gut feelings.

The right mortgage originator for you

Whether you’re buying a new home or refinancing your existing home, the home loan process can seem like an overwhelming experience.

The right loan originator can reduce – or eliminate – this headache. So make sure you’ve found the right solution for you and your needs.

As with other professions, whether it’s a doctor, mechanic, or plumber, you may need to do some research.

But the time you spend looking for the right loan originator can turn a complex mortgage experience into a smooth and enjoyable one.

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The information on The Mortgage Reports website is provided for informational purposes only and does not constitute an advertisement for any products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, its parent company or its affiliates.


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