The Job description of a loan officer includes meeting with loan applicants to identify their reasons for applying for a loan, evaluating their financial status, drafting a payment plan, and authorizing the loan.
Ideal applicants for this position should possess strong communication and interpersonal skills.
They should also have good decision-making abilities, which will play a vital role in carrying out their duties.
These skills make it easier and faster for loan officers to do their duties.
Some of the duties of a loan officer include acting as a liaison between loan applicants and the financial institution and helping applicants who qualify get the loan.
To perform well at your loan officer job, it is very important you know and understands the job description.
That said, I will advise that you carefully study this free guide on the job description of a loan officer, even before taking up a job as one.
What does a Loan Officer do?
Loan managers are specialists who assist loan applicants in applying for loans; they evaluate applicants to determine if they are trustworthy.
Financial institutions use a process called underwriting to ascertain whether or not an applicant is qualified for a loan.
Often, they make use of underwriting software to recommend the amount of loan suitable for an applicant based on his or her financial status.
Loan officers review the software’s recommendations and then decide on the type and amount of loan suitable to an applicant, considering the applicant’s need and financial status.
Loan officers also perform many customer service duties while interacting with clients and supporting them through applying for and paying for a loan.
What are the Major Types of Lending a Loan Officer may Specialise in?
There are three major types of lending, and loan officers often major in one of the three.
A loan officer can major in commercial, consumer, or mortgage lending.
This involves loans for businesses. The loan could either be for a startup or an expansion.
Commercial lending is usually more tactical than other types of lending.
And sometimes, one financial institution alone cannot afford to carry the burden of the loan alone because the amount is usually huge.
Includes personal loans, home loans, and education loans.
It is a less difficult process compared to other lending types.
In small financial institutions, underwriting software is not used to make recommendations; the loan officer usually handles the whole decision-making process.
Mortgage lending involves loans for real estate investment.
Typically, mortgage loan officers sort for their clients.
Therefore they have to develop good relationships with real estate companies and realtors.
In some states, they also require certification. We will discuss this later in this loan officer job description guide.
Other types of loan officers include Loan collection officers and Loan underwriters.
Loan collection officers: They contact clients with delinquent accounts and petition the court to transfer collateral ownership.
Loan underwriters: They are in charge of assessing an applicant’s credibility. They collect, analyze and verify loan applicants’ financial and personal information.
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What are the Duties and Responsibilities of a Loan Officer?
Here are the common duties and responsibilities of a loan officer usually featured in the job description.
1. Meet with Loan Applicants
Loan officers are responsible for meeting with loan applicants.
During the meeting, they identify their needs and reason for applying for a loan.
They also collect relevant documents and information for the loan application.
Loan officers also interview applicants to ascertain their financial status and ability to pay back and draft a payment plan.
2. Inform Clients of Loan Policies and Regulations
Before completing a contract, loan officers teach applicants the institution’s loan policies and regulations.
The contract can be concluded when applicants agree to abide by the policies and regulations.
3. Reject Loan Applications
After meeting with clients and assessing their Financial status, a loan officer may reject a loan application.
Whenever loan applications are rejected, the loan officer must also explain why they were rejected to the applicants.
4. Respond to the Applicant’s Questions
The loan officer is also responsible for responding to loan applicants’ questions.
They also resolve any issue that concerns loan applications.
5. Explain to Applicant the Different Loan Options
A loan officer’s responsibility is to explain the different lending types to applicants. As well as the terms and conditions attached to each loan option.
This way, applicants can easily decide on what they want.
Other duties and responsibilities of a loan officer include the following:
- Negotiate other ways of payment with clients who have failed to pay back their loans within the agreed time.
- Advertise other services and products of the financial institution to clients who may be interested.
- Carry out loan market research to identify potential loan markets.
- Reach out to clients whose loan payment is due and send the necessary information to the delinquent account for collector action.
- Go to court to claim ownership of collateral when a client fails to pay back loans at the stipulated time.
- Cross-check loan agreements carefully to ensure they are accurate and aligned with loan policies.
- Make use of underwriting software to recommend loan types to clients.
- Act as liaison between loan applicants and the financial institution.
What Qualification do I need to become a Loan Officer?
The minimum academic requirement for loan officers is a bachelor’s degree in finance, economics, business management, business administration, or other related fields.
In some financial institutions, a person with a master’s degree certificate may get preference.
Commercial loan officers must know how to read financial statements and general accounting.
Loan officers, except mortgage lending loan officers, do not need certification or license.
Although some schools offer certification and training for loan officers, it is not mandatory to have one.
But, getting certified shows one’s interest in that career path, and it is also a plus to the resume or portfolio of a loan officer as it also shows expertise.
In most countries and states, mortgage bank officers must obtain a loan originator license.
Obtaining this license requires the applicants to complete a minimum of 20 hours of coursework. And then sit for and pass a licensing examination.
Often, loan officers get training on the job.
This training may be in seminars or under the supervision of a more experienced colleague.
What Skills does a Loan Officer need?
Employers also include certain skills in the job description of a loan officer.
This is because possessing these skills helps a loan officer perform his or her task easily and quickly.
Some of the skills commonly featured in a loan officer job description include:
1. Communication Skills
A loan officer explains different loan options and their terms and conditions.
To do this, an officer must possess good communication skills.
Loan officers should be able to communicate effectively verbally and in writing.
It is also important to note that good communication skills involve listening as much as it has to do with speaking.
A good loan officer should also possess active listening skills.
That way, they can understand applicants better and help them better.
2. Interpersonal Skills
Loan officers are also required to possess good interpersonal skills.
This is because they are supposed to develop good relationships with existing and prospective loan applicants.
By so doing, they may be able to persuade potential loan applicants to take the loan.
3. Customer Service Skills
Loan officers perform so many customer service duties.
Therefore, they are expected to possess good customer service skills.
Responding to or treating clients poorly can outrightly chase potential loan applicants away.
4. Decision-making Skills
After assessing the necessary information and an applicant’s financial status, a good loan officer should be able to make good decisions.
This decision must be taken with the financial institution’s benefit and the applicant’s financial goal in mind.
5. Problem-solving Skills
A good loan officer should be able to identify problems related to loan applications quickly.
After identifying a problem, the loan officers should also think critically to find the best solution to resolve the issue.
Loan officers should also be capable of working independently.
You should be able to carry out your job with or without supervision.
You should also possess good time management and qualitative skills to succeed in this career path.
Also, employers look out for those with mental stamina and strong negotiation skills.
During an interview, it is very important to refer to these skills.
Also, you need to highlight them in your resume.
Where do Loan Officers Work?
Some of the typical employers of loan officers include:
- Mortgage companies
- Commercial banks
- Automobile dealers
- Credit intermediation agencies
- Saving Institutions
Job vacancies may be posted online or advertised in local newspapers or radio stations.
How much do Loan Officers make?
On average, loan officers in the United States earn up to $63,270 per year.
Their salary ranges from $32,569 to $132,680 per year.
These figures may be different in your geographical location.
The salary of a loan officer may be determined by so many factors, such as:
- Years of experience
- Area of specialization
More experienced and qualified loan officers are likely to earn more than their less experienced and/or qualified colleagues.
Loan Officer’s Work Environment and Schedule
Loan officers usually work in offices of financial institutions.
In some organizations, a loan officer must sort for clients.
In such cases, they may have to visit different offices and organizations.
A loan officer may also travel from one state to another to meet with clients.
Also, loan officers usually work full-time at regular working hours.
Overtime and working on weekends may be necessary if need be.
Loan Officer Job Outlook
Loan officer job opportunities are expected to increase 8% from 2018 through 2028.
Although there may be more jobs for loan officers as the economy grows, technological advancement may limit the increase in bank branches.
This may, in turn, affect the employment of loan officers.
As such, existing or prospective loan officers are advised to familiarize themselves with the tech aspects of their desired career path.
Conclusion: Loan Officer Job Description Guide
This free guide on the job description of a loan officer has all the answers to your question concerning this career path.
If you have questions that were not answered, kindly leave your question in the comments session.
Although this guide on the job description of a loan officer was compiled with aspiring loan officers in mind, it can also be used by employers as a template for creating a job description.
Therefore, feel free to make use of it to support your goal.
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