What’s The Average Salary Of A Loan Officer
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A loan officer represents a bank, , or other financial institution and finds and assists borrowers in acquiring loans. Loan officers can work with a wide variety of lending products for both consumers and businesses. They must have a comprehensive awareness of lending products and banking industry rules, regulations, and required documentation.
Loan officers review loan applications and analyze an applicant’s finances to determine who is eligible for a loan. They also educate consumers on loans, verify financial information, and contact individuals and companies to see if they apply for a loan.
Is It Better To Be A Loan Officer Or Real Estate Agent
While a real estate agent may be knowledgeable about different financing options, a loan officer is ultimately responsible for helping clients find the loan that is the best fit for their situation. They can help present different loan products and ensure their clients are getting the best rates and fees that are fair.
Being A Loan Officer Can Be Really Lucrative
- There are few jobs other than doctors, lawyers, and sports stars
- That pay several hundred thousand dollars a year in salary
- Top loan officers have the potential to make that kind of money too
- And even average ones can make six-figures annually during good years
If a mortgage loan officer gets just one of those deals to go through, it often equates to a huge payday, sometimes as much as a few months salary working a minimum wage job or other lower paying jobs.
So thats the incentive, big money. But there are a number of questions you need to ask yourself before setting out in the mortgage industry as a loan officer.
First and foremost, it is not an easy job. Sure, a mortgage broker or bank may tell you that its simple. And yes, you may not have to work very hard in the traditional sense, or take part in any back-breaking work.
But factor in the stress, the near misses, lost deals, the shots to your ego, and the wheel-spinning and it isnt as effortless as they may make it out to be.
You will see deals fall through and you will waste a lot of time. You will have mental breakdowns as loans slip through your fingers, and brokers and real estate agents scream at you as deadlines close in.
You will undoubtedly make mistakes, which will require a phone call to the borrower to let them know you cant do the deal. It will be embarrassing and unpleasant.
All that aside, lets look at a loan officers typical day, not that any day is ever typical
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Home Loans And Real Estate: Whats The Future
Uncertainty has been one of the defining features of 2020. Thats no different for the housing market. Since no one has ever lived through anything like this before, no one knows whats next, or can even make a very good guess.
Some things havent changed. The way people qualify for mortgages is still driven in large part by how much of their income theyll have for house payments after covering other debts. Most lenders look for a debt-to-income ratio of no more than 43%. And many financial advisors suggest that what mortgage lenders approve isnt necessarily what you can afford. In other words, you probably should borrow less than youre allowed.
Some trends that no one would have foreseen a year ago are now beginning to emerge. One trend is that home layouts have become important in shaping the housing recovery.
Especially new homes with a different layout, Kan says. You might have someone going from a townhouse to a single-family home because they have two people working at home and kids schooling at home.Designs with home offices and spaces for home-based education are more attractive than they once werefor good reason. You have a different layout because you have different needs, Kan says.
To the extent people can move to less dense areas, they have, Kan says. The builders will tell you theyre seeing more new construction in some of these areas.
What Is A Loan Officer
Loan officers are essential members of the financial community. They typically serve as representatives of banks, lending institutions, credit unions, or other financial businesses. Their job is to meet and evaluate individuals who apply for loans to determine whether to approve or reject the request.
Their role is very similar to that of mortgage loan originators, who work closely with borrowers in the mortgage lending process, but they are quite different from mortgage loan brokers. Mortgage loan brokers are the middlemen who connect mortgage borrowers with respective lenders. Unlike loan officers, they do not provide funds to lend to borrowers. They simply operate paperwork and approval processes between the other two parties.
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Current Conforming Loan Limits
On November 30, 2021 the Federal Housing Finance Agency raised the 2022 conforming loan limit on single family homes from $548,250 to $647,200 – an increase of $98,950 or 18.05%. That rate is the baseline limit for areas of the country where homes are fairly affordable. In higher-cost areas like San Francisco or New York City the single-family home loan limit can go as high as $970,800.
Here is an overview of the current limits based on the number of units in a building. Limits in the third row apply to Alaska, Guam, Virgin Islands, Washington D.C & Hawaii.
| Units |
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Mortgage Loan Officer Licensure And Certification
Whether you graduate with a bachelors degree or go the working route, you must obtain a mortgage loan originator license to become a fully qualified mortgage loan officer. To get your MLO, youll have to complete 20 hours of pre-licensure education and pass the Nationwide Multistate Licensing System & Registry exam.
You must also submit to a background and credit check and renew your MLO license each year by following the licensure requirements in your state.
While its not required, you may want to obtain a mortgage loan officer certification to propel yourself to the top of a prospective employers list. Several postsecondary schools and banking associations, such as the American Bankers Association and the Mortgage Bankers Association, offer courses, training programs, and certifications.
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How Are Loan Officers Compensated
Loan officer commission structure varies widely. MLOs who work in call centers might receive a flat salary, but most are paid on commission. Commissions are calculated according to the basis points of the loan: Each basis point is 1/100th of 1 percent, so 25 basis points, or BPS, equals 1/4 of 1 percent. For example, the commission of 25 BPS on a $100,000 mortgage would be $250.
According to a survey conducted by Inside Mortgage Finance, just under half of retail residential MLOs receive commissions that are between 75 and 150 basis points per loan.
âGo where you can get the very best training and support at the beginning of your career â donât worry about the BPS you get per loan in the beginning,â advises Joe Parsons, a mortgage originator in the San Francisco Bay Area, via a response on Quora.com. âOnce you have learned the ropes and have begun to build a reputation, and a book of business, youâll be in a far better position to look for the best commission schedule.â
Most loan officers close anywhere from 18 to 25 loans in a year, with some doing as many as 35 to 40. U.S. News ranks loan officers as #15 in its list of Best Business Jobs, with a median salary of $63,040.
How Are Mortgage Officers Compensated
Mortgage officer fee construction varies extensively. MLOs who work in name facilities would possibly obtain a flat wage, however most are paid on fee. Commissions are calculated in line with the premise factors of the loan: Every foundation level is 1/a hundredth of 1 p.c, so 25 foundation factors, or BPS, equals 1/4 of 1 p.c. For instance, the fee of 25 BPS on a $100,000 mortgage can be $250.
In keeping with a survey performed by Inside Mortgage Finance, just below half of retail residential MLOs obtain commissions which might be between 75 and 150 foundation factors per loan.
Go the place you may get the easiest coaching and help originally of your profession dont fear concerning the BPS you get per loan at first, advises Joe Parsons, a mortgage originator within the San Francisco Bay Space, through a response on Quora.com. After getting discovered the ropes and have begun to construct a repute, and a ebook of enterprise, youll be in a much better place to search for the most effective fee schedule.
Most loan officers shut anyplace from 18 to 25 loans in a 12 months, with some doing as many as 35 to 40. U.S. Information ranks loan officers as #15 in its checklist of Greatest Enterprise Jobs, with a median wage of $63,040.
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Mortgages Fixed Rate And Adjustable Rate Formats
There are two primary mortgage formats in the United States, the fixed-rate and the adjustable-rate . Fixed-rate mortgages remain the most common, and most popular, mortgage product for US home buyers. With a fixed-rate mortgage, interest rates are set during the loan’s origination and they remain constant throughout the life of the loan. Fixed-rate mortgages are offered at a variety of terms, Fixed-rate mortgages are offered at a variety of terms, typically in 15, 20 or 30 year formats, with a 30 year fixed-rate mortgage be the most popular throughout the US. The main advantage of these types of loans is that buyers are protected from any sudden and unexpected increases in interest rates while they hold the mortgage. Monthly payments remain predictable, as does the total cost of the loan itself.
Adjustable-rate, also known as variable-rate, mortgages may not be the most popular format in the US, but they are the prevailing home loan product in many other countries. Indeed, in the United Kingdom, Australia, and Canada they are the most common type of home loans, and in these countries it is extremely unusual to find a fixed-rate rate mortgage product. This is because the basic structure of the mortgage lending industry in most countries doesn’t support long term lending. With the notable exceptions of Germany and Austria, in most European countries the predominant mortgage format remains the ARM or variable-rate loan.
What Is The Average Age Of A Mortgage Loan Officer
Today, the average age of Loan Originators is between 46 and 47, which is about four years older than the US workforce overall. More importantly, opportunities for Loan Officers are expected to grow at about 11 percent between now and 2026 more than 50 percent faster than the growth for all occupations.
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Loan Officers: Now More Important Than Ever
Residential originators are facing not only helping each client navigate the current lending environment, but also the organizational challenge of transitioning all or part of their daily business life to a work-from-home Loan Officer . For many, these are uncharted waters. It is this time, given the turbulence of the industry and the financial markets, that borrowers rely on their experienced LO more than ever.
First, who are we talking about? According to the Bureau of Labor Statistics, there are approximately 308,000 loan officers nationwide, and HMDA data indicates there are more than 5,500 lenders. According to STRATMOR Originator Census® Study data, about 60 percent of originators are men, while according to the National Association of Realtors, about 63 percent of Realtors are women. The median age of Realtors in 2018 was 54. The average age for an LO, according to STRATMOR data in 2019, was 47 and the average age of the borrower was 46.6.
STRATMOR Groups 2020 Originator Census numbers show that the average annual production per LO was $11,584,013, or 44 units. STRATMOR estimates that in 2019, as many as 30 percent of applications in Retail were completed online by the borrower with no assistance from the LO. This means seventy percent of borrowers are still going to a loan officer to help them start their mortgage loan.
What Does A Loan Officer Do On A Daily Basis
- Selling is the main focus of a loan officer
- That means bringing in new customers to apply for home loans
- Whether its a refinance loan or a purchase loan
- So you can earn a commission when it eventually funds
The broker or bank, or whomever employs the loan officer, may provide sales leads to the loan officer, or they may be completely on their own when it comes to acquiring business, making up their own sales and marketing to pitch potential borrowers.
If you work at a large bank or call center, you may be fortunate enough to just take incoming phone calls.
That means youll sit in a cubicle all day and field phone calls. You could also be required to follow-up with customers who expressed interest.
The good part is that you wont have to find prospects on your own. That can be the hardest part.
If you work for a broker or a small company, you may still be provided with leads, though the quality could be less than desirable. That means you will have to network, make contacts, and market yourself and your services.
This entails trying to get individuals to finance home purchases or refinance their existing mortgages. Thats it. When that happens, you generally get paid.
Often, loan officers will implicitly or explicitly partner with a real estate agent or office so they can provide financing to their home buying prospects.
If youve ever purchased a home, youve likely had the preferred lenders contact info thrown your way when it comes time to fill out a loan application.
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Ask A Lender: Whats Your Average Mortgage Closing Time
When youre buying a house, timing is everything.
Closing just a day late can cost you five figures of hard-earned cash. But dont let that fact stop your homebuying goals before they start.
Instead, get proactive. Ask your lender upfront, How fast can you close a loan?
Your lenders average mortgage closing time is one of the most important factors as you consider working with them.
How Common Is Home Foreclosure
Foreclosure is quite uncommon. In the wake of the 2008-2009 global recession which was driven in large part by a housing crash much of the damage was concentrated on the states of Arizona, California, Florida & Nevada.
The above spike was driven by the combination of a housing price crash, a global recession, and many consumers levering up by refinancing during the housing boom.
In states like California with high real estate prices homeowners carry a higher debt load against their homes.
The number of bankruptcy filings vastly exceeds the number of foreclosures.
Homeowners are far more likely to fall behind on credit card or student loan payments than they are to fall behind on car or home loans.
From 1931 to 1935 in the Great Depression the foreclosure rate exceeded 1%. Between 2007 & 2016 over 7.7 million homes were foreclosed upon. Over 1.1 million foreclosures occured across California, while Florida had 960,000 foreclosures. Foreclosures were more prevanent in housing boom cities like Miami & Las Vegas.
Over 3.4 million homeowners lowered foreclosure risk by modifying their loans under the HARP program.
There are over 134 million housing units across the United States. In the decade following the Great Recession about 5.8% of homes were foreclosed upon.
Prior to the crisis period about 1,000,000 homes were foreclosed upon each year according to the Mortgage Bankers Association.
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How Many Loans Does A Mortgage Loan Officer Close Per Month
If over the course of a year the MLO closed one loan per month over 12 months, that loan officer will have made $48,000 that year. Keep in mind that this scenario assumes only one loan originated a month. Most loan officers can close anywhere from 18 to 25 loans in a year, with some doing as many as 35 to 40.
Technology To Get The Job Done Efficiently
Technologyhas played its part to make financial services more efficient however,mortgage banks havent used it that well in particular. Why do so many lendersstill rely on lots of paperwork and oldfax machines to process information?
Using oldmethods not only slows things down, butits annoying as well. Processing even a single loan involves handling a massive amount of information, making complexcomputations, and validating thousands of rules. Computers are way faster andaccurate in comparison to human loanofficers and of course, more efficient at processing information.
According tothe 2013 Oxford economic study, there isa 98% chance that computers will replace traditional loan officers in the future.
Although wedont entirely agree that the loan officers job should be automated. Wethink:
- Computers should only do the calculations
- Customers should have direct and transparent access to these calculations.
- Human loan officers should provide support and guidance to the customers, and they should not be compensated with any commission to avoid any conflict of interest.
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