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How to Become a Mortgage Loan Officer - Step By Step Guide

How to Become a Mortgage Loan Officer - Step By Step Guide

March 01, 2022 by X2 Mortgage

A career as a Mortgage Loan Officer (MLO) can be extremely rewarding especially if you are interested in real estate and finance. However, it can also be very challenging. You must have excellent communication skills, strong arithmetic skills, and good organizational skills.

Mortgage Loan Officers are critical players in the home-buying process. They work with mortgage borrowers and lenders to determine the best financial option for a home purchase.

If you want to help future home buyers while earning unlimited income, then you should consider getting licensed and becoming one! However, you will be required to meet specific qualifications so check out our proven step-by-step guide to becoming a Mortgage Loan Officer (video version here:


Who is a Mortgage Loan Officer?

A Mortgage Loan Officer (or in our case… a Mortgage Broker) is a finance professional responsible for gathering, verifying, and analyzing information from potential home borrowers (such as income, debts, and credit history) to determine whether they qualify for a home loan. They also help borrowers facilitate the loan process through approval and closing when buying or refinancing a house.


What Do Mortgage Loan Officers Do?

The role of an MLO is crucial in the real estate industry. They act as a go-between for mortgage lenders and borrowers. They often bring clients to lenders in exchange for a commission. However, a loan officer can work for a mortgage correspondent, a commercial bank, credit union, retail lender, or a mortgage broker.

The primary responsibilities of a Mortgage Loan Officer are as follows:

  • Reach out to potential homebuyers using advertising, connections, seminars, and other methods.

  • Establish contacts with real estate firms.

  • Assess potential borrowers' credit and assist them in selecting the best loan product.

  • Explain the various loan options to borrowers and provide them with helpful home loan resources.

  • Help clients build loan applications and ensure that the loan is approved and funded.

  • Ensure that loan agreements are compliant with state and federal laws.

  • Keeping track of loan applications and mortgage transactions.

  • Work with underwriters to identify possible borrower risks.

  • Collaborate with appraisers to determine a property's actual market value.

8 Steps in Becoming a Mortgage Loan Officer

A mortgage loan officer is an attractive career that provides numerous opportunities for flexibility, unlimited earning potential, and growth. In the United States, the average annual income for a Mortgage Loan Officer is $73,756 - yet those who really work hard can reach income levels of $300,000+.

With such appealing financial and professional opportunities, one would anticipate a difficult entry into the industry. The good news is that the process of becoming a Mortgage Loan Officer is quick and simple, and the requirements for obtaining a license are not too difficult to obtain.

1. Education and Background

To become a loan officer, basic requirements prepare you for the business and make you appealing to potential employers. Some of them are;

  • Academic Qualifications: Although financial institutions can hire loan officers with just a high school diploma, some employers may look favorably upon candidates who have obtained a higher level of education, such as a bachelor’s degree in finance, economics, business, or a related field.

  • Personal Work History: Mortgage loan officers typically have prior experience in the finance industry, customer service, or sales.

It is important to note that obtaining a bachelor’s degree does not necessarily guarantee getting a job as an MLO. You will need to take additional tests and pass a series of exams before being offered a position. It is also possible to enter the field of finance through a combination of education and experience

2. Register with NMLS

The National Mortgage Licensing Service (NMLS) is the primary regulatory body for MLOs, and it provides a wealth of useful information, including state-specific licensure requirements. The first major step in obtaining an MLO license is to create an account on the NMLS website, fill out the information, and submit your application.

If you get stuck, you can easily call NMLS, and someone would be there to walk you through where to get the specific information on how to get a license for any state. The NMLS phone number is 1-855-665-7123.

3. Obtain Pre-Licensure Education

To become a Mortgage Loan Officer, you must complete 20 Hours of Pre-licensure education coursework. The course is necessary to ensure that people who want to be Mortgage Loan Officers have a thorough understanding of what the job entails.

Many pre-license course providers offer various teaching styles and resources, such as pre-recorded classes, instructor-led and interactive classes, online and live classes, and 7 to 14-day learning options. To complete your 20-hour pre-license course, register with an approved provider such as Mortgage Educators (HINT: Use discount code "X2MORTGAGE" for 40% off).

The following topics are typically covered in the 20-hour pre-licensure course:

  • 3 hours of Federal law and regulations.

  • 3 hours of ethics (including; instruction on fraud, consumer protection, and fair lending issues)

  • 2 hours of lending standards training for the non-traditional mortgage product market.

  • 12 hours of additional mortgage origination instructions.

Some topics are specific to each state. Visit the NMLS website to learn more about the education requirements in your state.

4. Pass SAFE Exam

To become a Mortgage Loan Officer, you are required to pass the SAFE (Secure and Fair Enforcement Act) NMLS test with a score of at least 75%. The test is required to assess your understanding of federal and state mortgage lending regulations. To take the test, you must make an appointment and pay the test fee on the NMLS website.

There are 125 questions on the test, which you must answer in 120 minutes. The test is also available to be taken online. If you repeat the SAFE MLO test three times, you must wait 180 days before you can retake it. If you don't pass the first trial, you'll have to wait another 30 days before you can register for a retake, which will cost you another test fee.

The SAFE exam is typically structured as follows.

  • Federal Mortgage-related Laws: 23%

  • General Mortgage Knowledge: 23%

  • Mortgage Loan Origination: 25%

  • Ethics: 16%

  • Uniform State Content: 13%

The test isn't particularly difficult, but you'll need to study diligently and strategically if you want to pass on your first trial. As of 2020, only 56% of people who take the test pass on their first trial.

You should know that completing the 20-hour course may be insufficient to pass the exam. As a result, we’ve compiled this list of suggestions to assist you.

Tips to Pass the SAFE test

  • Memorize important terms and laws.

  • Use practice questions to your advantage.

  • Take advantage of test preparation courses.

  • Writing down concepts and information help in retaining it.

It's always better to over-study rather than under-study as it'll save you time and money. Plus it'll better prepare you for your new career!

5. Apply for NMLS License

Congratulations on passing your exam! It's now time to apply for your MLO license. The following is a summary of the requirements for the license application found in the SAFE Act and the NMLS:

  • Register with the NMLS

  • Submit personal history and experience (including 10 years' worth of financial services employment history).

  • Submit to a background check (an FBI administrative civil/criminal finding).

  • Provide fingerprints and authorization for a criminal background check.

  • Submit to an independent credit report.

  • Present several means of identification.

  • Ensure that the information provided is accurate and verifiable.

You do not need perfect credit to become a Mortgage Loan Officer. The main purpose of the check is to prevent bankruptcy and abuse of credit.

You must also not have been convicted or pleaded guilty to a felony involving fraud, dishonesty, breach of trust, or money laundering in the past, as this will disqualify you from receiving an NMLS license. The goal is to establish trust and protect the safety of homebuyers entrusting their credit and important real estate decisions to MLO.

At this stage, you’ll want to get company sponsorship. You may obtain your license while being employed by a company. The company certifies that you work for them and pay for your license application.

6. Pay for Your First Year and Obtain your License

You are required to pay fees to obtain licensure. The amount of these fees differs from state to state. Once your license has been approved, you will be given an NMLS Unique Identifier. Every Mortgage Loan Officer, real estate company, and branch with an NMLS account has this permanent number. These unique identifiers are listed on all advertisements for mortgage origination services and help track companies and licensees.

In fact you can search any NMLS identifier at the NMLS Consumer Access portal

7. Start Working as a Loan Officer

Where you decide to work as an entry-level mortgage loan officer is crucial because it sets the stage for your entire career. You can either start at a large mortgage company or find a local mortgage company in your city.

As a newbie in the industry, working with a local lender is better than the big guns. This gives you a better opportunity to gain the experience needed and connect with great mentors who can help you understand your role as an MLO. 

How to Find Mortgage Loan Officers Jobs

Several online resources can assist you in locating job openings and available roles for mortgage loan officers all over the world. Take advantage of these resources and apply for full-time or remote jobs, whichever you prefer. Prepare a resume and cover letter highlighting your qualifications and unique skills to be hired by a reputable mortgage company.

Employers are always looking for people who have;

  • Interpersonal and marketing skills

  • Customer service skills

  • A keen eye for detail and a good sense of judgment

  • Financial knowledge in depth

  • Understanding of the real estate industry (or at least, willingness to learn)

  • Organizational skills.

8. Maintain Active Licensure

You must renew your license every year, complete continuing education courses, and keep all of your NMLS information up to date. For instance, you must update your NMLS profile to include your new sponsor when you move to a new company.

You must also complete eight hours of NMLS-approved continuing education each year to qualify for license renewal. Failure to do so could result in the loss of your license.

The following topics are typically covered in continuing education:

  • 3 hours of federal regulations and laws

  • 2 hours of ethics instruction (including; instruction on fraud, consumer protection, and fair lending issues)

  • 2 hours of lending standards training for the non-traditional mortgage product market.

  • 1 hour of additional mortgage origination instruction may be met by taking a state-specific course, depending on your state's requirements.

Final Note

Taking the first step toward becoming a Mortgage Loan Officer can pave the way for a very rewarding career. Thus, if a career in the mortgage industry appears to be a good fit for you, start researching the licensing requirements and costs in your state today. 

We hope you find this guide useful, and wish you a successful career as you assist people in moving into their dream homes. If we can help in any way, please don’t hesitate to reach out or even apply at X2 Mortgage!

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