Be a Loan Officer

When an individual or business needs a loan, they talk to a loan officer at a financial institution like a bank, credit union, or lending company – this is who helps them apply and gathers information that determines whether the loan can likely be repaid. As you can imagine, loan officers are an important cog in the everyday economy and are consequently in high demand. To become one is not necessarily easy, however, and requires good financial judgment coming from education and on-the-job training.

Steps

Building Credentials

1. Research the job. Before deciding that being a loan officer is the right job for you, learn about the field using online resources, especially those that specialize in jobs like Bureau of Labor Statistics at http://www.bls.gov/ Loan officers assist people with loan applications for cars, home, and college tuition, helping to determine the best available loan and to make them aware of the various requirements. Although most work for banks or other credit and financial institutions, some work independently with clients and businesses.
   • Your duties as a loan officer will include processing applications, making sure that the information is complete and accurate. Analyzing the data, you will determine if a client is credit-worthy, whether to grant a loan, and, if so, under what conditions the loan will be made.
   • Some loan officers are highly specialized. They can deal in consumer loans to people, commercial loans to businesses, mortgage loans for real estate, or in loan collection. Some loan officers also travel extensively to meet with clients at businesses or homes.
   • The average salary for loan officers in 2012 was $59,280. Some are paid a regular salary while others are paid on commission, with the volume of clients depending on the overall strength of the economy. Many mortgage loan officers must also work long hours.
2. Finish high school. While most loan officers hold a college degree, it is still possible to become one with only a high school education and on-the-job training. You will need a high school diploma at the very least, however. If you are trying to enter the field, then, make sure to complete your secondary schooling, taking any math, economics, business, and computer classes available to you. These courses will come in handy for further education and for your duties at work.
3. Complete a 4-year degree. Especially for more complex commercial loans, employers will require officers to hold college degrees in finance, economics, business, or a closely related subject. Plan to complete a bachelor’s degree in one of these fields, as it will give you the tools needed to analyze finances, read a financial statement, and understand the basics of business accounting and cash flow analysis.
   • Take courses in subjects like accounting, mathematics, economics, and business statistics. An increasing number of financial institutions are now using underwriting software, so it is also useful to be proficient with computers and financial software.
4. Develop the right skills for the job. Because they work so closely with clients, employers favor loan officers with sales skills, self-confidence, and strong interpersonal communication. Work hard to build your skills in these areas.
   • Mortgage lenders need to form relationships with real estate developers, builders, and agents to increase their referrals, for example. In some instances, you might even be contacting businesses to encourage loan applications. As an effective loan officer you must also be able to answer customers’ questions clearly and to guide them through the application process.
   • Take advantage of offerings in school to cultivate the right skill set. Courses in psychology, public speaking, and communication can all help.
   • Practice public speaking. You won’t be giving speeches as a loan officer, but you’ll be talking to clients and need plenty of self-confidence. Public speaking does just that. Spend some time every week in front of a mirror. Give a sales pitch, for example. Assess and repeat. You can also join an organization like Toastmasters International for more feedback.

Getting Your Foot in the Door

1. Build experience in the industry. Many banks like to hire loan officers with a prior background in the industry, especially if the employee doesn’t have a college degree. Some look for as much as five or more years of experience, or an equivalent in a related field. You will want to get as much experience as possible in banking. However, an aspiring loan officer can also gain the needed experience in related fields like customer service or sales.
   • Keep in mind that banks usually provide some kind of on-the-job training to loan officers. If hired, you will probably have to complete a mix of company-sponsored instruction and a few months of informal training.
2. Prepare for a hard schedule. Some loan officers work a normal, salaried 40-hour week, but many do not. Your schedule as a loan officer will most likely depend on several factors. For one, demand for loans is higher in good economic times and when interest rates are low. If you are working on commission, you may find that, when interest rates rise, you have to put in much longer hours to make ends meet.
   • In general, loan officers work very flexible schedules. Mortgage officers may have to work at night or be willing to take calls at all hours. Commercial loan officers may also travel to arrange loan agreements.
3. Apply for positions. At some point you will take the plunge and apply. Keep your eyes open for positions. If you are already in banking, let colleagues know that you are interested in moving into loans. You may find an opening at your current job or be able to arrange an internal transfer. If not, check listings online on websites like Linkedin or in your newspaper’s classified section. Most of the jobs in the industry will appear at places like banks, credit unions, or lending institutions.
   • Another option is to become an “independent loan originator.” This basically means that you are a self-employed loan officer. Do not think that is an easy way to go. To become one you will still need to meet all the usual education and licensing standards and register with the Federal Housing Administration. You will also need to get insurance as an independent broker, to protect yourself against mistakes.
4. Specialize as a specific kind of loan officer. Loan officers are usually one of three kinds, working in consumer, commercial, or mortgage loans. How you specialize may largely depend on the institution that you work for. Some banks do more commercial lending than others, for example. However, cutting a niche for yourself will focus your skills on a particular expertise.
   • Consumer loans are made to individuals. Think of these as “everyday loans.” A commercial loan officer works with regular bank customers to cover things like auto loans, education loans, or home renovation or improvement loans. Working with cover things like education and home equity loans.
   • Commercial loan officers work specifically with businesses. A commercial loan officers helps such organizations to underwrite costs like new inventory or equipment or even to expand their business.
   • The third kind of officer, mortgage officers, work with prospective real estate buyers. As a mortgage loan officer you will be more or less working entirely with individuals who need to take out loans in order to finance houses, purchase property, or to refinance existing mortgages.
5. Secure a proper license. In the United States, the federal government requires that all mortgage loan officers have a license. If you decide to specialize in mortgages, then, you will need to complete at least 20 hours of course work, pass an exam, and undergo a background and credit check.
   • Be aware that, in addition to federal requirements, laws vary by state. In New York State, for example, you must complete 20 hours of pre-licensing education that includes 3 hours on state-specific law, as well as 11 hours of continuing education years (with at least 3 hours of state-specific instruction).

Climbing the Ladder

1. Get a professional certification. The American Bankers Association and the Mortgage Bankers Association both offer ongoing training and certification programs for loan officers. Legally, you don’t need to be certified. But these programs will boost your credentials and chances of advancing. You’ll take a series of courses to improve your knowledge of banking, credit analysis, and mortgage law. You can even choose a program that is designed for your loan specialization.
   • For example, a loan officer can earn a residential or commercial Certified Mortgage Banker (CMB) certificate through the Mortgage Bankers Association.
   • The American Banker's Association offers certificates in Commercial Lending, Residential Mortgage Lending, and another in Lending Compliance.
2. Take a program in underwriting. Pursuing your professional development with a certification course in underwriting will, once again, increase your credentials and potential for advancement. Underwriting programs are designed for those already in the industry; you will take courses that improve your understanding of loan risk based on things like property types and value, capital, and debt. Two or even four-year degree programs are also available.
   • One skill that underwriting programs will give you is software literacy. While some banks still judge loan applications by set guidelines and human judgement, increasingly they are use specialized underwriting software that evaluates loan applicant. Knowing your way around these programs is a great skill to put on your resume.
3. Continue to learn. You will have to do a lot of professional development to be a great loan officer. Laws change often at the state and federal level. You will have to stay on top of these changes. Also, remember that you will need to complete a minimum amount of continuing education hours per year to maintain your license. Whether it be for certification, staying up-to-date, or just continuing education, it's in your interest to keep learning.

Tips

• Many loan processes have become automated with many being completed over the telephone or the Internet. Much of this is due to underwriting software that allows for a quicker evaluation of loan applicants.

Warnings

• Some loan officers see their salaries affected by the number of loans produced.

Sources and Citations

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