Loan Officer Job Description
Loan officers determine the creditworthiness of loan applicants. They help a variety of people obtain the money they need—students looking to finance their education, homebuyers seeking mortgages, entrepreneurs wanting to start businesses, to name a few. By examining the money seeker’s background and circumstances, loan officers evaluate how good a “risk” someone is, meaning how likely they are to meet the payback terms.
Loan officers primarily find jobs at banks, credit unions, and mortgage companies. Some are employed by automobile dealerships to work with customers requiring loans to purchase vehicles. Loan officers spend much of their time in offices, though sometimes they travel to meet clients at their residence or business. Hours tend to be full-time and oftentimes can extend beyond the traditional workday. The Bureau of Labor Statistics projects job prospects for loan officers will grow 11 percent between 2016 and 2026. While 318,600 people in the U.S. were classified as loan officers in 2016, that figure is expected to rise to 355,100 over the course of a decade.
Loan Officer Duties and Responsibilities
Institutions that lend money want to make sure they receive it back (with interest, of course). Thus, loan officers must take measures that promote timely repayment. Some of the core actions, as described in job postings, are the following:
People who want to borrow money fill out a variety of paperwork. They include information such as the amount they wish to borrow, the reason for the loan, their current employment status, their income, and references. Loan officers not only look at what’s on the forms, they verify it through means such as background checks, credit checks, financial statements, and calls to people listed. Using underwriting software and their own personal judgment, they make decisions on whether or not to approve the loan.
The loan process can be confusing, so loan officers seek to break information down in ways borrowers can understand. Knowing exact expectations for repayment from the get-go helps people make better decisions about whether they should take out a loan, the amount of money, and the time period in which to pay it back.
Issuing loans enables an institution to make money because the initial sum gets paid back with interest. Loan officers often look for good candidates for loans and talk to them about the possibilities, such as taking out money to make home repairs or to go on a once-in-a-lifetime vacation. In this respect, loan officers act much like marketers and salespeople.
Working with Others
Loan officers may need to consult others when putting together loans. For instance, a start-up business may request a loan that is too large a risk for a single bank but may be able to be shared among multiple lending institutions. At a car dealership, loan officers may work closely with the sales team to create monetary deals and packages.
Loan Officer Skills
Math skills are essential to loan officers since they deal with sums and interest rates on a daily basis. Loan officers also need to be excellent communicators because they are responsible for thoroughly explaining loans to those who seek them. Other admirable skills for loan officers to possess include:
- Paying attention to details so that everything written in the loan contract is correct
- Acting and looking professional to build trust with clients and reflect positively on the employer
- Exhibiting patience and good interpersonal skills because clients can be nervous and confused when making the major decision to take out a loan
- Analyzing multiple sources to make sound decisions
Loan Officer Tools of the trade
As they go about helping people obtain loans, loan officers frequently encounter the following:
- Credit reports – detailed history of a person or business’s credit used to help judge the suitability of taking on a loan
- Applications – documents clients fill out to request a loan
- Collateral – assets, such as property, used to secure a loan
- Financial analysis software – specialized computer software, such as Experian Credinomics, used to help evaluate applicants’ data to determine the risk involved in issuing a loan
- Computers – for email, Internet searches, spreadsheets, and basic office tasks
Loan Officer Education and Training
Loan officers tend to hold a bachelor’s degree, usually in a field such as business, economics, or finance. Another route is some post-secondary coursework combined with many years of work experience in banking, sales, or customer service. All new hires should expect a period of formal training as well as learning on the job. Certification can enhance job prospects for potential loan officers, and those dealing with mortgage loans must become licensed in their state.
Loan Officer Salary
The median annual salary for loan officers is $63,650. Loan officers in the 10th percentile earn about $32,800 a year, and the highest paid make in excess of $132,200 a year. Loan officers in New York, the District of Columbia, and Massachusetts make the highest median salaries in the U.S. – $79,660, $76,900, and $75,670, respectively. Some loan officers receive commissions or bonuses for bringing in new clients or building a record of well-performing loans.
Loan Officer Resources
As you contemplate becoming a loan officer, the following can be great places to turn to for answers to your questions:
American Bankers Association – This trade organization represents banks of all sizes and offers a wealth of information on the banking industry, as well as continuing education and training.
Mortgage Bankers Association – A leading voice in real estate finance, this organization is a go-to place for loan officers interested in handling mortgages.
Nationwide Multistate Licensing System Resource Center – Interested in getting licensed as a mortgage loan officer? This website contains both general guidelines and state-by-state requirements.
The 2016 Loan Officer’s Practical Guide to Residential Finance – This thorough reference acts as a primer for new loan officers and others interested in how the mortgage process works.
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