MORTGAGE LOAN ORIGINATOR: What They Do & How To Become One

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You’re ready to buy the home of your dreams, and it’s time to start the mortgage process. This is where a mortgage loan originator may help. Here’s what loan originators do and what you can anticipate from them during the home loan process.

What Is a Mortgage Loan Originator?

A mortgage originator is a company or person who works with a borrower to complete a home loan transaction. A mortgage originator, often known as a mortgage broker or a mortgage banker, is the original mortgage lender. Mortgage originators are members of the primary mortgage market and must collaborate with underwriters and loan processors from the application date to closing to obtain the appropriate documentation and shepherd the file through the approval process.

Types of Mortgage Loan Originators

Two of the most frequent forms of mortgage originators are mortgage bankers and mortgage brokers. While the titles sound identical, there are significant differences between the two. A mortgage banker works for a lending firm that funds loans with its own money at the closing. Mortgage bankers are employed by the majority of retail banks and credit unions.

A mortgage broker, on the other hand, acts as a go-between for the borrower and other mortgage banking organizations. The broker accepts the application, verifies credit and income, and often handles much of the underwriting and processing. Ultimately, they find a lending institution to fund the loan at closing.

What Does a Mortgage Loan Originator Do?

Mortgage loan originators guide borrowers through the mortgage application and loan closing processes. This may entail gathering your credit and financial information, assessing your needs and determining which loan options are best for you, negotiating rates, and submitting your application for underwriting.

Importantly, a mortgage loan originator will not make the ultimate decision on your loan application or the amount of money you can borrow. That is handled by the lender’s underwriting department, which assesses your risk as a borrower.

However, before a mortgage loan originator can assist you with the financing procedure, she must first persuade you that working with her is the best alternative. Some loan originators may feel and act like salespeople as a result of this. Loan originators have been subject to stronger state licensing and other regulations since 2008, including the duty to operate in the best interests of borrowers wherever practicable. However, you should never feel forced by a loan originator to commit to a specific mortgage package before fully comprehending the offer.

How To Become a Mortgage Loan Originator

A high school diploma or GED is required to work as a Mortgage Loan Originator. While a bachelor’s degree in finance or a similar discipline is not required for licensure, some employers may prefer it. In addition, you must obtain a Mortgage Loan Originator (MLO) license in your state. This procedure begins with completing 20 hours of National Mortgage Licensing Service courses (NMlS). Then you must obtain state licensure, the standards for which differ by state. In addition, you must pass the SAFE MLO exam, receive sponsorship (which can be your workplace), and obtain an NMLS unique identifying number. To keep your license current, you will most likely need to complete certain requirements after getting it.

Is it Necessary for a Mortgage Loan Originator to be Licensed?

Mortgage originators were not required to be licensed before the housing crisis.

When it comes to mortgage loans, consumers now have significantly more protection. Non-bank mortgage loan officers are now required to be licensed in the states where they originate loans.

If a loan originator works for a bank, a bank subsidiary, or a credit union, they are not required to obtain a loan originator license.

To earn a license, all other mortgage loan officers must go through a very rigorous process.

What are the Requirements for Mortgage Loan Originators in Terms of Licensing?

To become a mortgage loan originator, you must first receive a state license or be federally registered as an MLO.

To receive federal registration, the individual must be an employee of a depository institution (or a subsidiary of a depository institution) or an employee of a Farm Credit Administration-supervised institution. The Nationwide Mortgage Licensing System and Registry keeps track of MLO federal registrations (NMLS). You can confirm your MLO’s registration by visiting the NMLS consumer database.

What are the Mortgage Origination Fees?

A mortgage origination fee is a fee charged by a mortgage lender for services such as loan origination, processing, and underwriting. The origination fee will vary from 0.5 percent to 1 percent of the entire amount borrowed for your mortgage.

Is it possible for a mortgage loan originator to work from home?

It is possible to work from home as a mortgage loan originator as long as you meet your commitments on a continuous basis. Maintaining customer interactions during regular business hours, contacting advisers or institutions on a regular basis, and attending office meetings as needed are all responsibilities. Because a mortgage loan may result from a property transaction that occurs after hours or on the weekend, it is advantageous to set remote hours and fulfill your obligations outside of a usual schedule.

Choosing a Mortgage Loan Originator

Because a loan officer is such an important part of the home loan process, learning how to choose one is critical to ensuring you get the best mortgage and the best experience possible.

A qualified loan originator will have a wide skill set in addition to aiding you with your loan application.

A mortgage originator with the right combination of industry knowledge, communication skills, and integrity may make the complexity of a mortgage loan seem much easier – and the process much smoother.

Doing some research on the loan officer or firm is the best approach to ensure you’re working with a good one.

Even with the Consumer Financial Protection Bureau’s (CFPB) recent achievements to protect mortgage borrowers, it is still feasible to engage with an unscrupulous lender. That is why honest and trustworthy loan officers are essential.

Read Also: COMMERCIAL REAL ESTATE LOANS: Types, Rates, and Requirements

Fortunately, technology has made it easier than ever to conduct some fast due diligence.

A short period of time spent online might reveal a great deal. Examine social media and online review websites. Because it is impossible for a loan officer and/or their organization to hide unfavorable evaluations, you can learn a lot there.

Although technology has made it such that you almost never have to speak with a loan officer, you should. If you can’t meet with your loan officer in person, suggest a Zoom meeting.

Because real estate brokers and attorneys interact with loan officers on a daily basis, they can be a fantastic source of referrals for locating a reputable loan officer.

Read Also: BAD CREDIT MORTGAGE LOANS: Best Loan Options & Lenders In 2022

Meeting your loan officer in person or online will most likely allow you to gauge their work ethic and assess whether or not you will work well together.

When possible, good loan originators strive hard to generate new business prospects.

They will actively seek to establish relationships with real estate agents and attorneys. Because these people work with loan officers every day, they can be a fantastic source of referrals for locating an excellent loan officer.

Check the Better Business Bureau for the company’s and the loan officer’s ratings. Request references from prior clients, examine internet testimonials, and, most importantly, trust your instincts.

How Much Does a Mortgage Loan Originator Make

According to the US Bureau of Labor Statistics, the average mortgage loan originator earns little more than $63,000 per year.

But keep in mind that most MLOs are paid on commission rather than salary. So a mortgage loan officer who makes a lot of loans in high-priced cities or markets could earn a lot more money.

Nonetheless, several newer mortgage companies are abandoning the commission-based remuneration model for loan officers.

Better Mortgage, for example, has eliminated MLO commissions in order to make financing more transparent for borrowers. According to Better, a no-commission arrangement ensures that loan officers always have the borrower’s best interests in mind.

Read Also: What Is Mortgage Insurance Premium? How It Works

Is a Loan Officer the same as a Mortgage Loan Originator?

The terms “mortgage loan officer” or “loan officer” (LO) are sometimes used interchangeably with “mortgage loan originator,” but there is a tiny difference between the two. A loan originator can refer to both the entity or institution (lender) that starts the loan and the person (or professional) who works with you. A loan officer is a person who assists you with the mortgage application process. They ensure that all documents are correctly completed and delivered on time.

Mortgage loan originator vs. Mortgage banker

A mortgage loan originator differs from a mortgage banker in that the originator does not decide whether to approve or deny you a loan. A mortgage banker, on the other hand, may make this judgment. They will analyze your application to determine how much you can borrow and on what terms.

Conclusion

A mortgage loan originator’s responsibility is to guide your loan through the application, underwriting, and closing process so you may obtain the keys or meet your financial goals.

An MLO can refer to both the person or people in charge of loan origination and the entity in charge of loan funding. MLOs may operate directly for mortgage lenders or mortgage brokers, offering options from a variety of organizations.

Mortgage Loan Originator FAQs

What is a typical origination fee?

Lender origination fees are typically between 0.5 and 1% of the loan amount, plus any mortgage points connected with your interest rate.

How do I get rid of origination fees?

There is no way to completely eliminate mortgage loan origination fees. Whether you pay them in cash or not, the charges will be paid, either by the seller or by a higher interest rate or a larger loan amount.

Most state laws allow mortgage origination fees as long as the borrower receives full disclosure and agrees to the terms. Mortgage loan origination fees, on the other hand, may become illegal if certain conditions are met, such as: Overcharging for the fee

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