What Is a Loan Officer? Evaluating This Career in Finance

Do you love seeing others succeed and reach their goals? Loan officers help people reach big milestones and life goals on a daily basis. Working as a loan officer, also called a loan originator, you’ll have the opportunity to work alongside individuals and families looking to secure financing for big purchases—such as a home or a college education. These finance pros also work with businesses that are looking to launch a startup or purchase a new brick-and-mortar space.

No matter the type of client, loan officers get to play a crucial role in helping to make longstanding dreams a reality for many who’ve faced financial roadblocks in the past. And this rewarding job boasts some promising opportunity. Employment of loan officers is projected to grow 11 percent by 2026, according to the Bureau of Labor Statistics (BLS), indicating this crucial career in finance has substantial staying power.^*

If you’re interested in pursuing a career as a loan officer, then it helps to gather and review as much information as possible before committing. Read on to learn more about the daily duties, necessary skills, earning potential and more.

What do loan officers do?

In sum, a loan officer’s job is to “Minimize risk and maximize profits,” according to Skylar Wallace, CEO of Lendly. Loan officers are required to wear at least two different hats. First, a loan officer often works as a sort of salesperson to convince an individual or business that their bank or financial institution offers the best borrowing option. This can include the following:

• Contacting companies or individuals to ask if they need a loan
• Meeting with loan applicants to discuss ambitions and loan options
• Spelling out various types of loans and terms to the client

Once the business or individual is on board, the loan officer shifts from acting as a salesperson to being a loan approval chaperon. This can consist of the following elements:

• Gathering and verifying personal and financial information
• Inputting information into underwriting software, which produces a loan application recommendation based on the applicant’s creditworthiness and risk
• Considering underwriting output and any additional information to arrive at a decision
• Working with a third party, like a notary, to close the loan

The ability to perform several functions allows future loan officers the opportunity to utilize previous customer service or sales experience while also learning new software and technical skills. Keep in mind, however, that larger banks sometimes separate these roles into unique positions.

In general, there are three primary types of loan specialists, based on the kind of loans they work with. Do note that some of these specialty areas require separate certifications.

• Commercial loan officers specialize in business loans, some of which have such complicated financial situations that the business may work with the loan officer more than the lender to create a package of loans that best serves the business’ larger goals. Loan officers who love coordination and big projects might fit best here.
• Consumer loan officers work primarily with individuals buying a car or paying for college. This type of underwriting is normally automated, while some smaller banks or credit unions do it manually. This one-on-one connection is just right for personality types that excel at individuation, seeing the unique aspects of a person’s situation, and helping them get a loan that best fits their life.
• Mortgage loan officers deal with real estate, property and building loans. Their clients typically include real estate companies and home-buyers. This type of work requires a special mortgage lenders license offered by organizations like the Mortgage Bankers Associations (MBA) and the American Bankers Association (ABA).

Where do loan officers work?

Loan officers are typically employed by commercial banks, credit unions, mortgage companies and other financial institutions. Most work full time or more, depending on their workload and employer.

Though many loan officers work in local branches, Wallace says more and more banks are consolidating and have transitioned to a centralized underwriting team that approves all loans bank-wide, leaving the local office staff to just take applications.

But it’s also true that working at a local branch can have its own advantages. Since the loan officer position is relationship-based, Wallace notes these professionals often make connections by serving in their communities—coaching little league teams, attending parades and high school football games or joining the local chamber of commerce.

Local loan officers who are established in their communities will receive informal inquiries at all times of the day—Wallace says the best performing lenders are sure to follow up on these, but need to balance performance demands with their own personal happiness..

What skills do loan officers need?

Not everyone is cut out for a career as a loan officer. These professionals are tasked with making tough decisions and staying on top of several applications and client situations at once. With that in mind, the following soft skills will set most loan officers up for success:

• Decision-making: Loan officers can’t depend on the output of underwriting software and must consider what outside elements impact a client’s ability to pay the loan.
• An eye for detail: Each piece of information on an application can have a huge effect on the probability of the loan.
• Initiative: Since many loan officers are paid a commission, the more they can seek out new clients and promote the institution, the more successful both the loan officers and their company will be.
• Interpersonal Skills: Clients must have complete trust and confidence in their loan officer, believing that they are guiding them toward the best loan option to fit their lives and financial situation.

Jeff Hensel, a loan officer at North Coast Financial, emphasizes the relational aspect of being a loan officer and the importance of earning your client’s trust. “Home-buyers can often be anxious. At times, being a [mortgage] loan officer can feel like being a therapist,” he says. “Clients often need to be reassured that everything is going smoothly and their loan will close in time.”

In addition to soft skills, specific industry skills are in particular demand. According to our analysis of loan officer job postings, 60 percent ask for mortgage lending experience and 40 percent prefer candidates with mortgage underwriting experience. As far as past experience is concerned, 35 percent of job postings are looking for candidates with sales experience and 32 percent are seeking customer service skills.^**

How do you become a loan officer?

Most loan officer positions require a Bachelor’s degree in Accounting, Business or Finance, according to the BLS. Applicants must be able to understand general business accounting and read financial statements. Once you do score a job, expect some on-the-job training on how to use underwriting software and company-specific policies.

In addition to earning a Bachelor’s degree, mortgage loan officers must receive additional licensure. Interested candidates can earn certifications through the American Bankers Association (ABA) or the Mortgage Bankers Association (MBA).

Lou Haverty, a senior portfolio manager with more than a decade of experience working with a number of Philadelphia-area banks, notes that since this can be a competitive business to break into, working as a credit analyst can be a great place to start. “Successful credit analysts gradually move into junior relationship manger (loan officer) roles as they become available,” he says.

Could you thrive in a rewarding career as loan officer?

The ability to help others on a day-to-day basis as a loan officer can be very rewarding. Even during the difficult moments during which they have to turn applicants down for a loan or collect collateral from struggling clients, impactful loan officers can still make the circumstance a positive one. By forming relationships with the clients and potentially helping them become qualified, top professionals have the opportunity to transform the scenario into a positive, rewarding experience, Wallace says.

Between solid, commission-based earning potential, steady employment prospects and the satisfaction of making people’s dreams come true, becoming a loan officer could be the gratifying career path you’ve been seeking. If you’re considering taking a step into the world of finance, you’ll want to consider investing in a degree. To learn more, check out our article, “Is a Finance Degree Worth It? 4 Factors Impacting Your Finance Career Forecast.”

*Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, [information accessed September 10, 2018] www.bls.gov/ooh/. Employment conditions in your area may vary.
**Burning-Glass.com (analysis of 16,243 loan officer job postings, Aug. 1, 2017 – July 31, 2018)