What is a Mortgage Loan Originator and How Can They Help You?

Estimated reading time: 6 minutes

When it’s time for you to begin the mortgage process, there are several professionals who will be by your side. A key individual you’ll encounter will be a Loan Originator. But if you’ve never bought a home before, there are a lot of titles and terms to keep track of. We go over what you need to know about Mortgage Loan Originators and how they can help you find home financing success.

What is a Loan Originator?

A Loan Originator is a licensed professional who helps people find the right home loan for their financial situation. They understand different types of mortgage options, including loans for buying a home, renovating a property, or refinancing an existing mortgage.

Lenders may use different but similar titles of Loan Officer, Loan Originator (LO), or even Mortgage Loan Originator (MLO), however, they all do the same job.

Where Do Loan Originators Work?

Loan Originators can work for a bank, credit union, or other form of lending institution.

What Type of Licensing is Required to be a Loan Originator?

Loan Originators are required to have an NMLS number. NMLS stands for Nationwide Mortgage Licensing System, which is a centralized database used by mortgage and finance regulatory agencies to maintain state licensing.

These requirements keep Loan Originators’ borrowers and their lending institutions safe. Consumers may use the NMLS consumer access database to research any Loan Originator to check their licensing status and credentials. You can also use the database to check an MLO’s contact information, their current place of employment, their work history, qualifications, registration status, and what states they are licensed to do business in.

The type of registration and licensing required depends on the Loan Originator’s lending institution.

Loan Originators at Banks

If an LO works at a bank, they do not need a state license. However, they must:

• Register with NMLS
• Complete background checks and ongoing training required by their employer
• Work under the bank’s federal regulation and oversight

Loan Originators at Mortgage Lenders (Non-Bank Lenders)

Non-bank lenders have different requirements than banks. In addition to NMLS registration, Loan Originators must be fully licensed in each state where they conduct business.

To maintain their licensing, a non-bank LO must:

• Register with NMLS
• Complete at least 20 hours of pre-licensing education
• Pass a national mortgage test
• Allow state agencies to review their credit report
• Pass an FBI criminal record check
• No felony convictions – time and detail requirements vary by state
• Complete a minimum of 8 hours of annual continued education, plus any state requirements

What Does a Loan Originator Do?

Generally, the mortgage process has a lot of moving parts and processes. A Loan Originator helps you stay on track and informed throughout the experience, from first contact until post-closing. They will answer your questions, offer guidance, and make recommendations.

Build Relationships with Other Professionals

Your Loan Originator is not the only professional in the homebuying process. They work closely with real estate agents, attorneys, and other professionals within their own company. This is especially helpful for first-time homebuyers or prospective buyers from out of state who may not have connections. If you’ve been house hunting without a real estate agent, ask your Loan Originator for recommendations.

Learn Mortgage Programs and Guidelines

Chances are, the lending institution your Loan Originator works for has a variety of financing programs, each with its own requirements and highlights. They learn the ins and outs of these products in order to better recommend programs that work for your unique home and financing needs.

Your Mortgage Financing Guide

Your Loan Originator also helps you understand your mortgage eligibility and affordability. They will help answer any questions you have about the loan application in addition to walking you through what loan options might be available to you.

When you’re applying for pre-approval or filling out a formal mortgage application, your LO will collect your credit history and financial information. Then, they will assess your needs, provide you with rate options based on your situation and program, and submit your application to underwriting.

Does a Loan Originator Decide Your Mortgage Eligibility?

No, a Loan Originator does not make the final decision on a borrower’s mortgage approval. The loan is reviewed and approved by an underwriter, who evaluates the borrower’s financial information and property against loan program requirements and investor guidelines. However, the Loan Originator helps prepare the application, reviews basic qualifications, and guides the borrower through the process.

How Do You Choose a Loan Originator?

Deciding on a mortgage is a large financial commitment, so it’s important you trust the person who helps you throughout the process. You’ll want to work with a person who is knowledgeable about the mortgage industry and knows the ins and outs of your state’s specific laws.

When you’re deciding on a professional to work with, consider your personal needs and what type of guidance you want from the professional you work with. Do you work non-conventional hours, like nights or weekends? Do you have a preferred communication style?

Remember, it’s okay to ask questions to learn more about your Loan Originator before submitting an official application.

Here For Your Home Financing Success

At Homestead Funding, we know how important it is to find home financing professionals that you can trust as you obtain your mortgage. That’s why all of our Loan Originators are friendly, patient, and ready to help your financing dreams a reality! Don’t hesitate to reach out to us.