How to become a Loan Officer
What does a Loan Officer do?
Loan officers broker a variety of different loans. Personal secured and unsecured loans, collateral loans (such as auto or boat loans), and home loans such as mortgages and home equities are a few. They also facilitate business loans and lines of credit for commercial clients.
It is the loan officer's job to solicit loan applications from potential borrowers and help them apply for the loans needed. During the application process, a loan officer will collect data about the person, people, or business applying for the loan to help determine their credit worthiness and the probability of them repaying the loan. Often times, potential borrowers may not be familiar with the application or borrowing process. The loan officer will guide the borrower through the process to ensure a smooth and comfortable process for the applicant.
Loan officers sometimes also assist potential borrowers who may not qualify for a traditional loan by exploring non-traditional avenues and special borrowing programs. A good loan officer will match the client with the best available product to meet their needs while still maintaining the financial institution's well being.
Sometimes loan officers specialize in a particular aspect of the loan process. Some loan officers are called "underwriters." These officers are experts in risk assessment and usually help determine whether a loan can be granted and if so on what terms (i.e. interest rate, amount, length of the loan, etc.).
Other loan officers, sometimes called "loan collection officers," work with existing borrowers that may be behind in their repayment obligations to assist the borrower in finding a way to avoid defaulting on their loan. If an acceptable repayment plan cannot be negotiated or is not followed, the loan collection officer may then initiate "collateral liquidation" which involves foreclosure or repossession of a home, car or other item used as collateral for a secured loan.
What skills or qualities do I need to become a Loan Officer?
Loan officers generally act as salespeople. For this reason, good interpersonal and sale skills are very important. Employers usually look for people who
are self-confident and project a positive energy. Flexibility is helpful as some loan officer positions keep the officer at a stationery desk while others require travel to different clients' homes and businesses. Most firms also prefer candidates who are computer literate. especially those with experience using applications common to banking.
Currently, there are no licensing requirements for loan officers working for banks or credit unions. However, loan officers working for a mortgage bank or brokerage may be subject to state various licensing requirements. depending on the state or states where they are conducting business.
As previously noted, no formal education is required to become a loan officer, however a bachelor's degree is usually preferred. Additionally, there are private schools and banking associations that offer a variety of programs and courses for people interested in lending and for experienced loan officers who want to keep their skill sets current.
How much does a Loan Officer make?
According to data gathered from the U.S. Department of Labor's Bureau of Labor Statistics, the median annual salary for a loan officer is $51,760. The middle 50% earn between $37,590 and $73,630. These figures are as of May 2006. which is the most recent information available.
The form of compensation that loan officers earn can vary. While some institutions pay a flat salary, many pay a commission based on the number of loans they generate. Additionally, some firms pay a combination of salary and commission or bonus based on number of loan originations. In general, loan officers who are employed by smaller banks earn less than those working for larger institutions.
Experience also plays an important role in determining salaries. "According to a survey conducted by Robert Half International, a staffing firm that specializes in accounting and finance, consumer loan officers, referred to as personal bankers, with 1 to 3 years of experience earned between $30,750 and $36,250 in 2007, and commercial loan officers with 1 to 3 years of experience made between $45,750 and $70,250. Commercial loan officers with more than 3 years of experience made between $61,750 and $100,750, and consumer loan officers earned between $36,250 and $51,250."