What Is a Mortgage Loan Originator?

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What is a mortgage loan originator, also called mlo or loan officers, and what do they do and how do i become one

An MLO (Mortgage Loan Originator) is an individual or institution that assists potential borrowers in acquiring the ideal mortgage for their real estate transactions. The MLO serves as the original lender for the mortgage and works with borrowers from application through to the closing process.

Entering the mortgage industry as a Mortgage Loan Originator (MLO) involves engaging with multiple parties and navigating numerous procedures. This guide breaks down the main responsibilities and benefits of being an MLO.

Is a Mortgage Loan Officer different from an MLO?

The term “loan officer” refers to an individual acting as an MLO. You can either work directly for a lender or as a mortgage broker, i.e. aligning with various lenders to find the optimal loan option for your client.

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Duties of a Loan Originator

  • Client Guidance: Guide borrowers through the steps of obtaining a mortgage, answering their queries, gathering necessary documents, and verifying information.
  • Loan Estimation: For home buyers, provide an estimate of their loan amount and interest rate based on their income, credit report, and assets.
  • Ongoing Support: Continue to support clients throughout the application process, into underwriting, and ensure they’re prepared for closing.

Frequently Asked Questions by Aspiring MLOs

As you consider this career path, you may have several questions. Here are some common inquiries:

What fees do MLOs typically charge clients?

As an MLO, the main fee you charge your clients is known as a “loan origination fee”. This fee, which is included in the clients’ closing costs, is typically charged by you for processing and underwriting the loan. It usually costs between 0.5% and 1% of the total loan amount.

Do I need to be licensed?

Knowledge of the residential mortgage industry specific to your state is crucial. Nationwide banks require federal registrations, so individual MLOs don’t require a separate license. However, non-bank lenders require MLOs to obtain state licensing. An MLO could be licensed in multiple states, even if they work in one state.

To become an MLO, you must:

  1. Complete 20 hours of pre-licensing education
  2. Score a minimum of 75% on the two-part nationwide SAFE Mortgage Licensing Act Exam
  3. Agree to a comprehensive criminal background check
  4. Commit to yearly continuing mortgage education

What is the earning potential as an MLO?

Your income will depend on several factors, including your employer, experience, and the number of home loans you close each month.

Conclusion

Becoming an MLO can be a rewarding career choice, guiding clients through the intricate mortgage process, and ensuring they reach their goal of owning a home. If you’re ready to dive in, begin your journey by applying for the necessary training and licensing today.

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