Becoming A Home Loan Officer: A Guide

Becoming a home loan officer, also known as a mortgage loan officer (MLO), can be a rewarding career path for those interested in finance and real estate. MLOs play a crucial role in helping individuals and families secure loans to purchase their dream homes. Here's a step-by-step guide on how to become a home loan officer:

1. Meet the Basic Requirements: To become an MLO, you must be at least 18 years old and have a high school diploma or GED. Taking math and finance classes in school can provide a solid foundation for a career in this field.

2. Complete Pre-Licensure Education: The National Mortgage Licensing Service (NMLS) requires MLOs to take pre-licensure courses to ensure they understand the career. These courses cover topics such as federal laws, regulations, ethics, lending standards, and mortgage origination.

3. Research State Licensure Requirements: Each state has its own guidelines for obtaining an MLO license. Familiarize yourself with the specific requirements, fees, and procedures in your state.

4. Pass the SAFE MLO Test: To obtain your MLO license, you must pass the Secure and Fair Enforcement (SAFE) MLO test with a minimum score of 75%. This exam assesses your knowledge of federal and state mortgage lending laws.

5. Fulfill NMLS Requirements: The NMLS has additional requirements, including sponsorship by your employer, registration with the NMLS, providing authorization for a credit report and background check, and completing continuing education courses.

6. Maintain Active Licensure: Keep your license active by meeting ongoing requirements, such as keeping your information up to date and renewing your license periodically.

7. Gain Experience: After completing your education and obtaining your license, consider gaining experience by working with an established mortgage lending company, bank, or credit union. This will provide valuable on-the-job training and help you build a network of clients.

Meet basic requirements

To become a home loan officer, also known as a mortgage loan officer (MLO), you must meet the following basic requirements:

• Be at least 18 years old.
• Have a high school diploma or GED.
• Take math and finance classes in school to gain foundational knowledge in these areas.
• Have a bachelor's degree in a related field like finance or business (although this is not a strict requirement).
• Be registered with the National Mortgage Licensing System and Registry (NMLS).
• Pass a background check and get fingerprinted.
• Have a clean criminal history.

Finish pre-licensure courses

To become a home loan officer, you'll need to complete 20 hours of pre-licensure courses. These courses are designed to ensure you thoroughly understand what a career in this field entails.

The pre-licensure courses are offered by NMLS-approved providers and cover the following topics:

• Federal law and regulations (3 hours)
• Ethics, including fraud, fair lending, and consumer protection issues (3 hours)
• Training related to lending standards in the non-traditional mortgage product market (2 hours)
• Instruction on mortgage origination (12 hours)

In addition to these standard topics, you'll also need to complete state-specific requirements, which vary depending on the state in which you plan to practice. These requirements may include education on alternative lending products, such as reverse mortgages, or how to identify red flags on a mortgage application.

The pre-licensure courses can be completed in a variety of formats, including live classes, webinars, self-study, or online instructor-led programs. Some providers offer flexible learning options to fit your needs and schedule.

Once you've completed the required 20 hours of pre-licensure education, you'll be well-prepared to take the next step toward becoming a licensed home loan officer, which is passing the SAFE MLO test.

Research state licensure requirements

Each state has its own guidelines for obtaining MLO licensure. While the exact requirements vary, there are some commonalities between states.

Criminal background check

Each state is required to complete a criminal background check on MLO license applicants. This involves submitting fingerprints through the NMLS for an FBI criminal history check. The minimum requirements under the SAFE Act state that no one can obtain an MLO license if they have had any felonies in the last 7 years or if they have ever had a felony that was financial services-related, such as fraud, theft, bribery, or check forgery.

Credit background check

Under the SAFE Act, each state must review a credit report. However, the Act does not specify the minimum credit requirements. Some states are not telling applicants the minimum credit score required, but are instead declining applications for credit issues. Other states are more transparent about the minimum credit score required.

Education

All states require 20 hours of pre-licensing education offered by an approved provider. This usually costs around $299 to $399. However, some states also mandate an additional 1 to 5 hours of state-specific education. After obtaining a license, MLOs must also complete eight hours of continuing education each year to renew their license.

Testing

To obtain an MLO license, you must pass the National Test and a State Test. The National Test costs $92, while the State Tests cost $69 each. These tests only need to be passed once.

Pass the SAFE MLO test

Passing the SAFE MLO test is a crucial step in becoming a licensed mortgage loan officer. This test assesses your knowledge of federal and state mortgage lending laws, and a score of 75% or higher is required to pass. Here are some detailed instructions to help you prepare for and pass the SAFE MLO test:

• Understand the Exam Content: The SAFE MLO exam covers various topics related to mortgage lending. Familiarize yourself with the exam outline, which includes subjects such as federal mortgage-related laws, general mortgage knowledge, mortgage loan origination activities, and Uniform State Content. Focus on understanding the concepts rather than simply memorizing questions and answers.
• Take Pre-Licensure Education Courses: Before taking the SAFE MLO test, it is mandatory to complete 20 hours of pre-licensure education courses. These courses cover essential topics such as federal law and regulations, ethics, lending standards, and mortgage origination. Make sure to choose reputable and comprehensive pre-licensure programs to ensure you have a solid foundation of knowledge.
• Study Strategically: Allocate sufficient time for studying and prepare well in advance. Consider taking practice tests and utilizing study materials offered by reputable test preparation platforms. Focus on mastering the concepts rather than just memorizing facts. Aim to understand how different aspects of mortgage lending interact with each other.
• Maintain a Study Schedule: Consistency is key when preparing for the SAFE MLO test. Create a study plan and stick to it. Break down the content into manageable portions and allocate time accordingly. This will help you stay focused and avoid last-minute cramming.
• Seek Additional Resources: Enhance your preparation by enrolling in test prep courses or seeking guidance from experienced mortgage instructors. Online resources and forums can also provide valuable insights and tips for passing the exam.
• Practice with Mock Exams: Familiarize yourself with the exam format and types of questions by taking mock exams. This will help you identify your strengths and weaknesses and allow you to improve your test-taking strategies.
• Understand Retake Policies: Be mindful of the waiting periods between retakes. If you don't pass the exam on your first attempt, you will need to wait 30 days before retaking it. If you fail the exam three times, the waiting period increases to 180 days.

Remember, passing the SAFE MLO test is a critical step in obtaining your mortgage loan officer license. Ensure that you thoroughly understand the exam content, dedicate sufficient time to studying, and utilize available resources to enhance your preparation.

Meet NMLS requirements

To become a home loan officer, you must meet the following NMLS requirements:

Sponsorship

Your employer must sponsor and supervise your mortgage loan officer duties. The regulatory body in your state must also approve your sponsorships.

NMLS Unique Identifier

You will need to obtain an NMLS Unique Identifier, which is a permanent number assigned to each officer, real estate company, and branch with an NMLS account. These identifiers are used to track licensees and companies and are listed on all advertisements for mortgage origination services.

Payment of Fees

You must pay the required fees to obtain your license. These fees vary by state.

Register with the NMLS

You must register with the NMLS by creating an account on the State Mortgage Registry website. After creating an account, you will receive a personal NMLS number that will be maintained for the duration of your work as a loan officer.

Credit Report Authorization

You must provide authorization for a credit report, and you must have a strong credit history.

Criminal Background Check

You must provide fingerprints for a criminal background check.

Verify Information

You must verify the accuracy and completeness of the information you provide.

Disclose Regulatory Charges

You must disclose any charges from financial regulatory agencies.

Employment History

You must provide 10 years' worth of financial services employment history.

Identification

You must present several types of identification information.

Frequently asked questions