Loan Officers


Quick Facts: Loan Officers
2017 Median Pay $64,660 per year 
$31.09 per hour
Typical Entry-Level Education Bachelor's degree
Work Experience in a Related Occupation None
On-the-job Training Moderate-term on-the-job training
Number of Jobs, 2016 318,600
Job Outlook, 2016-26 11% (Faster than average)
Employment Change, 2016-26 36,300

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Loan Officers Career, Salary, and Education Information

What loan officers Do

Loan officers evaluate, authorize, or recommend approval of loan applications for people and businesses.

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loan officers

Duties of Loan Officers

Loan officers typically do the following:

  • Contact companies or people to ask if they need a loan

  • Meet with loan applicants to gather personal information and answer questions

  • Explain different types of loans and the terms of each type to applicants

  • Obtain, verify, and analyze the applicant’s financial information, such as the credit rating and income level

  • Review loan agreements to ensure that they comply with federal and state regulations

  • Approve loan applications or refer them to management for a decision

Loan officers use a process called underwriting to assess whether applicants qualify for loans. After collecting and verifying all the required financial documents, the loan officer evaluates the information they obtain to determine the applicant’s need for a loan and ability to pay back the loan. Most firms use underwriting software, which produces a recommendation for the loan based on the applicant’s financial status. After the underwriting software produces a recommendation, loan officers review the output of the software and consider any additional information to make a final decision.

The work of loan officers has sizable customer-service and sales components. Loan officers often answer questions and guide customers through the application process. In addition, many loan officers must market the products and services of their lending institution and actively solicit new business.

The following are common types of loan officers:

Commercial loan officers specialize in loans to businesses, which often use the loans to buy supplies and upgrade or expand operations. Commercial loans frequently are larger and more complicated than other types of loans. Because companies have such complex financial situations and statements, commercial loans usually require human judgment in addition to the analysis by underwriting software. Furthermore, some commercial loans are so large that no single bank will provide the entire amount requested. In such cases, loan officers may have to work with multiple banks to put together a package of loans.

Consumer loan officers specialize in loans to people. Consumers take out loans for many reasons, such as buying a car or paying college tuition. For some simple consumer loans, the underwriting process is fully automated. However, the loan officer is still needed to guide applicants through the process and to handle cases with unusual circumstances. Some institutions—usually small banks and credit unions—do not use underwriting software and instead rely on loan officers to complete the underwriting process manually.

Mortgage loan officers specialize in loans used to buy real estate (property and buildings), which are called mortgage loans. Mortgage loan officers work on loans for both residential and commercial properties. Often, mortgage loan officers must seek out clients, which requires developing relationships with real estate companies and other sources that can refer prospective applicants.

Within these three fields, some loan officers specialize in a particular part of the loan process:

Loan collection officers contact borrowers who fail to make their loan payments on time. They work with borrowers to help them find a way to keep paying off the loan. If the borrower continues to miss payments, loan officers start the process of taking away what the borrower used to secure the loan (called “collateral”)—often a home or car—and selling it to repay the loan.

Loan underwriters specialize in evaluating whether a client is creditworthy. They collect, verify, and evaluate the client’s financial information provided on their loan applications and then use loan underwriting software to produce recommendations.


Work Environment for Loan Officers

Loan officers held about 318,600 jobs in 2016. The largest employers of loan officers were as follows:

Credit intermediation and related activities: 80%

Management of companies and enterprises: 6%

Automobile dealers: 4%

The depository credit intermediation industry includes commercial banks and savings institutions, and nondepository credit intermediation includes mortgage companies.

Loan officers who specialize in consumer loans usually work in offices. Mortgage and commercial loan officers often work outside the office and meet with clients at their homes or businesses.

Work Schedules

Most loan officers work full time, and many work extensive hours.


How to Become a Loan Officer

Most loan officers need a bachelor’s degree and receive on-the-job training. Mortgage loan officers must be licensed.

Education 

Loan officers typically need a bachelor’s degree, usually in a field such as business or finance. Because commercial loan officers analyze the finances of businesses applying for credit, they need to understand general business accounting, including how to read financial statements. Some jobseekers may be able to enter the occupation without a bachelor’s degree if they have related work experience, such as experience in sales, customer service, or banking.

Licenses, Certifications, and Registrations 

Mortgage loan officers must have a Mortgage Loan Originator (MLO) license. To become licensed, they must complete at least 20 hours of coursework, pass an exam, and submit to background and credit checks. Licenses must be renewed annually, and individual states may have additional requirements.

Several banking associations, including the American Bankers Association and the Mortgage Bankers Association, as well as a number of schools, offer courses, training programs, or certifications for loan officers. Although not required, certification shows dedication and expertise and thus may enhance a candidate’s employment opportunities.

Important Qualities 

Decisionmaking skills. Loan officers must assess an applicant’s financial information and decide whether to award the applicant a loan.

Detail oriented. Each piece of information on an application can have a major effect on the profitability of a loan, so loan officers must pay attention to detail.

Initiative. Loan officers need to seek out new clients. They often act as salespeople, promoting their lending institution and contacting people and firms to determine their need for a loan.

Interpersonal skills. Because loan officers work with people, they must be able to guide customers through the application process and answer their questions.


salaries for Loan Officers

The median annual wage for loan officers was $64,660 in May 2017. The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less. The lowest 10 percent earned less than $32,670, and the highest 10 percent earned more than $135,590.

In May 2017, the median annual wages for loan officers in the top industries in which they worked were as follows:

Automobile dealers: $84,230

Management of companies and enterprises: $68,740

Credit intermediation and related activities: $63,420


Job Outlook for loan officers

Employment of loan officers is projected to grow 11 percent from 2016 to 2026, faster than the average for all occupations. Although the demand for loan officers will increase as the overall economy grows, the decline of bank branches may moderate employment growth.

Economic growth will lead to more demand for loan officers, as both businesses and individuals seek credit to finance commercial investment and personal expenditure.  Loan officers will be needed to evaluate the creditworthiness of applicants, and determine the likelihood that loans will be paid back in full and on time.

Employment of loan officers in commercial banks and savings institutions is projected to grow 3 percent from 2016 to 2026. As bank customers increasingly use mobile and online banking services, the need for bank branches will decline. Banks have decreased the number of branches in operation in recent years, and this trend is expected to continue. Because the banking industry is the leading employer of loan officers, this trend will depress employment growth for these workers.    

Job Prospects 

Job opportunities should be good for people with lending, banking, or sales experience. In addition, some firms require loan officers to find their own clients, so candidates with established contacts and a referral network should have the best job opportunities.

Employment projections data for Loan Officers, 2016-2026:

Employment, 2016: 318,600

Projected Employment, 2026: 354,900

Change, 2016-2026: +11%, +36,300


Careers Related to loan officers

Financial Analysts

Financial analysts provide guidance to businesses and individuals making investment decisions. They assess the performance of stocks, bonds, and other types of investments.

Financial Examiners

Financial examiners ensure compliance with laws governing financial institutions and transactions. They review balance sheets, evaluate the risk level of loans, and assess bank management.

Financial Managers

Financial managers are responsible for the financial health of an organization. They produce financial reports, direct investment activities, and develop strategies and plans for the long-term financial goals of their organization.

Insurance Sales Agents

Insurance sales agents contact potential customers and sell one or more types of insurance. Insurance sales agents explain various insurance policies and help clients choose plans that suit them.

Personal Financial Advisors

Personal financial advisors provide advice on investments, insurance, mortgages, college savings, estate planning, taxes, and retirement to help individuals manage their finances.

Real Estate Brokers and Sales Agents

Real estate brokers and sales agents help clients buy, sell, and rent properties. Although brokers and agents do similar work, brokers are licensed to manage their own real estate businesses. Sales agents must work with a real estate broker.

Securities, Commodities, and Financial Services Sales Agents

Securities, commodities, and financial services sales agents connect buyers and sellers in financial markets. They sell securities to individuals, advise companies in search of investors, and conduct trades.

Tax Examiners and Collectors, and Revenue Agents

Tax examiners and collectors, and revenue agents determine how much is owed in taxes and collect tax from individuals and businesses on behalf of federal, state, and local governments. They review tax returns, conduct audits, identify taxes owed, and collect overdue tax payments.

Tellers

Tellers are responsible for accurately processing routine transactions at a bank. These transactions include cashing checks, depositing money, and collecting loan payments.

OccupationENTRY-LEVEL EDUCATION2017 MEDIAN PAY
Financial AnalystsBachelor's degree$84,300
Financial ExaminersBachelor's degree$81,690
Personal Financial AdvisorsBachelor's degree$90,640
Tax Examiners and Collectors, and Revenue AgentsBachelor's degree$53,130
Insurance Sales AgentsHigh school diploma or equivalent$49,710
Securities, Commodities, and Financial Services Sales AgentsBachelor's degree$63,780
Real Estate Brokers and Sales AgentsHigh school diploma or equivalent$47,880
Financial ManagersBachelor's degree$125,080
TellersHigh school diploma or equivalent$28,110

Citation:

Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, Loan Officers,
on the Internet at https://www.bls.gov/ooh/business-and-financial/loan-officers.htm