What is a mortgage loan officer?
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Mortgage loan officers are representatives of financial institutions offering home loans. Also known as mortgage loan originators, LOs or MLOs, they are federally registered or licensed professionals authorized by the Nationwide Mortgage Licensing System and Registry (NMLS) to advise borrowers on their financing options.
What does a mortgage loan officer do?
Often, your first interaction with a mortgage lender is with one of its loan officers. The loan officer serves as the point of contact through the mortgage preapproval, application, underwriting and closing process — communicating with you, your attorney, your real estate agent and the lender’s underwriting department. Depending on the type of lender they represent, you might meet with one in person at a branch location, communicate with one primarily online or over email or on the phone, or a combination.
The loan officer’s main responsibility is to inform you of your mortgage options and help you choose the right program for your situation. This involves checking your credit and collecting documents, such as your pay stubs and W-2s, for the preapproval and application.
After gathering information about your credit and finances, the loan officer will present you with mortgage programs you qualify for, with down payment requirements, rate and fee information and other details. Listen carefully and ask questions.
Once you decide on a course of action, the loan officer will provide you with a loan estimate, help get you a preapproval letter so you can make offers on homes, complete an application when you sign a purchase agreement and fill in any gaps in underwriting as you prepare for closing.
If you’re not eligible for the lender’s programs, the loan officer might also suggest how to improve your chances of getting approved in the future, such as lowering your debt-to-income (DTI) ratio, or refer you to another lender if you ask.
Overall, a loan officer’s job is to help you find the best mortgage based on your eligibility and needs, and help ensure your loan closes on time.
Broker vs. loan officer
A mortgage broker is also a licensed professional, offering services similar to those of a loan officer in almost every respect. The difference: A broker works with wholesale lenders instead of one institution, giving you access to a wider range of loans at varying costs. In contrast, a loan officer only offers programs from their lender. If you work with a loan officer at a specific institution, this might mean you’ll have limited options or miss out on the best deal.
Brokers also charge a fee, which is often baked into the loan’s pricing versus appearing as a separate expense in your closing costs.
Loan officer vs. originator
Loan officers are also known as loan originators, and, technically, both terms are correct. “Originator” is a regulatory term used to describe officers.
However, “originator” might also refer to the lender originating and funding the mortgage. The term “officer” wouldn’t apply in this instance.
How do loan officers get paid?
Loan officers are often paid on commission, usually a percentage of the amount you’re borrowing. You don’t pay this commission directly; the loan officer is compensated by the lender. However, you might be charged an origination, application or underwriting fee. These are part of the loan’s closing costs — the primary way lenders make money.
How to find a mortgage loan officer
- Compare lenders: Begin by comparing at least three mortgage lenders. This might include your bank or credit union and an online lender. Consider your needs: Can the lender close quickly, for example, or does it offer assistance programs?
- Get referrals: Get recommendations from family, friends and your real estate agent, and check out lender reviews and testimonials. It might be tempting to go with a big name, but don’t rule out a local lender, especially if it has a longstanding reputation in the community. This type of lender might also be more knowledgeable about the local market and have more flexibility compared to a bank.
- Connect with an officer: Once you have your short list of lenders, get in touch with a loan officer. You can either fill out a form on the lender’s website, call or visit a branch. For some, an in-person interaction helps foster a relationship that might come in handy if issues arise.
Questions to ask a mortgage loan officer
When you talk to a loan officer, ask these questions:
|How long have you been in the mortgage business?|
|What are your hours, and how often will you communicate with me? Will it be by email, phone or text?|
|What is the best mortgage for me?|
|Does the lender offer down payment assistance or first-time homebuyer programs?|
|How much will this loan cost?|
|Does this rate quote include points or credits?|
|Can I prepay, and if so, is there a penalty?|
|Can I make biweekly or extra payments?|
|Will you sell this loan or keep it in your portfolio?|
|Will you service the loan or outsource?|
|What refinancing options do you offer?|