What Does a Home Loan Officer Do?

If you’ve received a mortgage recently—or plan to do so in the near future—there’s a rather good chance that you’ve interacted with a home loan officer. Loan officers are key parts of any lending process and are often employed by banks and credit unions as an integral piece of the process that ends with you getting the mortgage you need for a new home.

But what is a home loan officer? What do they do? At Rivermark Community Credit Union, our experts are here to answer your home loan questions. In this article, we’ll look at what it means to be a home loan officer: their duties, what it takes to become one, and what you can expect when interacting with a home loan officer at your local bank or credit union.

What Are the Duties of a Home Loan Officer?

Simply put: a loan officer is a person who evaluates any application for a loan from a credit union or bank. This can take many forms. A commercial loan officer, for instance, typically works with businesses on loans that can be quite complex, such as for purchasing new office space or doing a mass upgrade of on-site technology. A consumer loan officer is someone who might evaluate a loan for purchasing a car or paying college tuition. And a home loan officer—also called a mortgage loan officer—specializes in evaluating loan applications.

The duties of a loan officer of any stripe can further vary from institution to institution or even from individual to individual. For example, one loan officer might specialize in collections, that is, contacting people who have missed their loan payments and working out a payment plan wherein they can continue making up what they owe.

Regular Tasks

For the most part, however, nearly all loan officers will be involved in some sort of the following:

  • Meeting with applicants. A loan officer will meet with those who want a loan. This helps them get to know those involved and see what they’re like, as well as learn more about their goals and plans.
  • Explaining available loans. We don’t expect you to be a financial expert—so a good home loan officer (or any loan officer, really) will go over your options, explain what they mean, and how each might affect your financial state in the long run. They may ask you questions, and you can ask them questions in return as you work out which type of loan will be best for you.
  • Evaluate financial information. In this stage, which typically takes place after the face-to-face meeting, the loan officer will obtain financial information including credit rating, annual income, and so on. They will verify this information’s accuracy and then analyze it to determine the risk to the lending institution. Someone looking to buy a $5 million home with an annual income of $30,000 (and no other assets) would raise some significant red flags, for instance.
  • Approve or deny loan applications. Based on their analysis, the loan officer will approve the loan application, deny it, or decide that they need external input, typically from a manager. Before a decision is made, the loan officer will ensure that the terms of the loan agreement are in full compliance with all relevant laws.

A loan officer is typically employed by a credit union, bank, or other lending institution. However, while rare, independent loan officers who do contract work with a lending institution do exist.

How Do I Become a Home Loan Officer?

All sorts of loan officers, mortgage or otherwise, must be licensed; however, the specific requirements tend to vary from state to state. At time of writing, however, the 2019 enactment into law of the SAFE Act means that loan officers are legally able to move to a different state and still conduct business. You can read more about that through the Nationwide Multistate Licensing System & Registry.

As being a loan officer is a job that tends to involve knowledge of math and finances, as well as being extremely detail-oriented, most loan officers have a college degree, typically in a financial or economic field. However, on-the-job training for bank or credit union employees who never graduated from college may also suffice as work experience.

Typically, if you want to become a home loan officer, you must complete coursework in excess of 20 hours, pass an exam, and have background and credit checks run. Again, check with individual states for specific rules.

If you’re detail-oriented, like numbers, want to help put people in their dream homes, becoming a home loan officer can be a very rewarding career path.

What Should I Expect When Meeting a Home Loan Officer?

These days, some mortgage applications may not involve meeting a loan officer at all. Algorithms have become very complex and can evaluate applications much more quickly than a human can. However, algorithms are not perfect, and there may never truly be a substitute for live human interaction.

When meeting a loan officer, you will almost always find them friendly, knowledgeable, and helpful. Here are some tips to make the most out of your consultation.

  • Bring all relevant information. This can include pay stubs, tax information, or other proof of income. Knowing where you stand can help the home loan officer give you advice before they crunch the numbers.
  • Know which questions to ask. It’s always a good idea to be informed. Ask questions such as, “How much down payment is required?” “Do I qualify for any kind of financial assistance?” “What is the interest rate on this loan?” “Can I get a fixed-rate mortgage?” and so on. The answers will help inform your financial decisions.
  • Ask about your monthly payment. This one is important, so it deserves its own bullet point. After all the conversation, ask your loan officer what you’ll actually be paying every month. It can be difficult to make concrete info out of the jumble of numbers and terms that might feel overwhelming, so knowing what you’ll be expected to pay every month is important.
  • Be honest. It can be embarrassing to talk about your financial status with other people, but honesty is the best policy—especially with someone who’s trying to find a loan term that works for you. Trying to hide negative financial information can, in the best-case scenario, get your loan application denied when the truth is found out. In the worst-case scenario: you’ll be locked into a loan you might not be able to afford.

We hope these answer your questions about what a home loan officer does.