Mortgage Loan Originators: What They Do And How They Can Help You

Obtaining a mortgage requires several steps and players. To help you qualify for a mortgage, lenders need loan applications filled out, financial documents turned in, fees paid and questions answered.

It can be hard to keep track of everything. Luckily, you don’t have to. Mortgage loan originators will walk you through the loan process to ensure you make it to the closing table.

What Is A Loan Originator?

A mortgage loan originator (MLO) helps a prospective borrower get the right mortgage for a real estate transaction. An MLO can be a lending company, mortgage broker or loan officer.

The primary function of the MLO is to qualify borrowers through the mortgage process. They’ll serve as the primary point of contact and should be in touch with borrowers from preapproval to closing.

Mortgage Loan Officer

The term “loan officer” refers to an individual acting as an MLO. Loan officers may work for a direct lender or as a mortgage broker who partners with several different lenders to find you the loan option that best aligns with your personal finance goals, budget and preferred loan terms.

What Do Loan Originators Do?

MLOs will guide you through the steps of getting a mortgage while answering questions, collecting documents and verifying information. If you’re purchasing a home, they’ll also provide an estimate of your loan amount and interest rate based on a review of your income, credit report and assets.

The MLO will continue to work with you through the application process, into underwriting, and help ensure you’re ready for closing. If the underwriter has any questions about your application, or needs additional information, the MLO will serve as a liaison between you and the underwriter.

Remember, an MLO can be a person or lending institution. While the loan officer is the person who works with you, the lender is the institution that initially funds the loan. A mortgage lender can be a bank or non-bank organization, like Rocket Mortgage^®.

For instance, let’s say you submit your loan application to Rocket Mortgage (an MLO). You’ll work directly with a Home Loan Expert, who will act as your loan officer and help you figure out which type of home loan, mortgage rate and term will best fit your situation. They’ll also keep you updated on the approval process and answer your questions along the way.

Mortgage Loan Originator Requirements

Mortgages come in several different loan types, have various qualifications, require certain documents and vary in terms depending on loan requirements, the lender and state laws. It’s important to work with an MLO that has knowledge of the residential mortgage industry in your state.

Nationwide banks are required to have federal registrations and do not require individual MLOs to obtain a loan originator license.

For non-bank lenders, like credit unions, MLOs are required to acquire state licensing. An MLO could be licensed in multiple states, even if they work in one state. While the exact requirements vary by state, here are the minimum licensing requirements:

• Complete 20 hours of pre-licensing education
• Score a minimum of 75% on the two-part nationwide SAFE Mortgage Licensing Act exam, developed by the Nationwide Multistate Licensing System (NMLS)
• Agree to a thorough criminal background check
• Commit to continuing mortgage education each year

How Do You Choose A Mortgage Loan Originator?

MLOs help you navigate the mortgage process, so you’ll want to work with someone who is knowledgeable of the industry and knows the ins and outs of your specific state’s laws.

A mortgage is a big financial commitment, too, one that also involves you sharing personal information, including Social Security numbers, bank statements and tax documents. It’s imperative to choose an MLO you can trust.

Choosing an MLO who is knowledgeable, helpful and trustworthy may require you to do some research. You’ll want to assess your loan officer or broker and their company. First, make sure they have an up-to-date MLO license.

Then, look through their website, social media pages and third-party review sites to learn more about the company’s mission and what their past and current clients have to say. Ask friends and family for referrals. Talk to potential MLOs on the phone or visit them in person. It’s okay to shop around until you find the right lender, loan officer or broker for you.

FAQs: Mortgage Loan Originators

Now that you have a surface level understanding of mortgage loan originators and what they do, you’ll likely have some questions. Below, we answer some of the most common questions about MLOs.

How much are mortgage origination fees?

You may notice in your closing costs a line item called a “loan origination fee.” These are mortgage origination fees charged by the MLO for processing and underwriting the loan. They typically cost 0.5% – 1% of the total loan amount.

For example, a borrower with a loan amount of $100,000 can expect to pay around $500 to $1,000 in mortgage origination fees.

What’s the difference between a loan originator and a loan officer?

The easiest way to remember the difference is that loan officers are almost always people while loan originators can be people or financial institutions. Another way to think of it is that a loan officer could be employed by a loan originator.

The Bottom Line

An MLO should help make the mortgage process easier for you by walking you through the steps of buying your home and funding your loan. If you’re ready to work with an MLO and a loan officer who can help you through underwriting and final approval, apply for a mortgage with Rocket Mortgage today.