Becoming a Loan Officer advice

[Greg Betts]

I'm considering a move into the mortgage industry to better align myself with my real estate investing goals. What advice can you give about the industry and what I should be looking for in a company?

I would be transitioning from a sales position 100% commission, no base, health benefits included and a fairly flexible schedule. What should I expect as a new Loan Officer?

Thanks,

Greg

[Jeff Dulla]

@Greg Betts Expect it will be a grind for those first couple years. I mean really tough - a lot "no's", a lot of dead end relationships with realtors, realtors and other professionals taking your money to sponsor events with little in return, etc. 

Also expect that the business has to be one of the most heavily regulated in the US now. Meaning heavy compliance. Most people have no idea what goes on behind the scenes and once you see the amount of things that happen for each loan, your head is probably going to spin.

With all that said, it is a great industry. Very few jobs like it. I do genuinely love what I do. I think the key would be to find a company that is established, has a great/nurturing culture, and a solid on boarding process. I think without that, you may feel very lost/frustrated through the next couple of years. 

[Kevin Romines]

@Greg Betts With the new laws that have been in place a few years now, loan officers are compensated differently than in the past. You will still be 100% commission however unlike in the past, now you will be paid at least a minimum draw amount of minimum wage an hour against your commissions. Because of this change in the law, lenders now have minimum production requirements for their loan officers. 

Typically you must close between 2-4 loans a month or they will let you go. Below that amount, your costing them more than what your making them. 

You will typically get between 1-1.5% of the loan amount as your commissions per loan. Most lenders are large enough that they will offer you full benefits or close to full benefits. 

You need to concentrate on the loans that are clean, easy and fast closings. Try not to get to many that are to complicated and drawn out, they will demand to much of your time when your 1st starting out. Realtors will be a primary source of your loan referrals, so develop those relationships as much as possible.

Refinances are quick and can be easy, but they get complicated and down right frustrating when a property doesn't appraise for what you need to make a deal work. So, yes go after them, but be very strategic in what and how much you go after them. 

It will take you between 30-60 days to close on your 1st deals in the pipeline, so account for the time you will need to market for and get the 1st batch of loans. You might prime the pump and be talking to some of your contacts now to let them know your going that direction so you have as many loans as possible right when you start. 

Get with more senior loan officers and loan officer assistants and processors, make them your top go to people. Gain as much knowledge about the systems and guidelines as you can. Learn fast, move your files forward and be aggressive in doing so every day. 

Spend a min. of 2 hours a day up to 6 hours a day marketing. The number one task you have is keeping a pipeline with enough funding's to close a min. of 4 a month for 3 months. You typically close between 25-50% of the loans that you get applications for. So if you want to close 4 a month, you must get 16 new applications a month to start. 

That should give you an idea of the starting life of a loan officer. 

[Tyler Anderson]

Hi Greg.  I have been a loan officer for 14 years.  I think being in the industry has helped me understand the local real estate market and has given me the flexibility to pursue my real estate investing.  As you are probably aware, the mortgage industry has gone through a lot of change over the last few years with regulation.  It is not a simple business and can be a pain in the ***.  My advice is to find a company that can help give you as much initial training as possible.  There is a lot to learn in today's environment and you really have to be knowledgeable on the loan process and underwriting guidelines.  Ideally, I would advise you to work under someone to learn the business. The last thing you want to do is to get a bunch of loans in your pipeline, only to mess them up and delay/miss a closing.  I would also focus on companies that are purchase orientated, not refinance orientated.  Refinances will come and go with the market, however purchase business will be ongoing.   If you need any further information, don't hesitate to reach out.  Good luck!  

[Harjeet Bhatti]

If you have time for 9-5 job, start with consumer direct department so you can have leads from your company.  Once you understand all the compliance and guidelines you can look for another departments also. Mortgage Industry is great place to work! I am in this industry from last 15 years never look back in other industry. 

[Tony Le Claire]

Hi Greg,

New Mortgage Loan Officer here. The experiences and knowledge our fellow BP members are providing is extremely valuable toward your future success. I’ve been working at a big bank as an LO for a year now and love it. I️ love it so much that I’m willing and ready to take a calculated risk and switch to a local lender and make 100% commission with the goal of earning a better quality of life and income. One piece of advice I’d provide is to find a mentor who will spend time coaching you and helping you grow as an LO.

For example, the other main reason I’m deciding to switch to a local lender now is because I’ve built a great relationship with a very experienced and successful LO. This LO has already helped me succeed at the bank and is ready to help me grow at the local level. Without this mentor ship, it would be tough to make the transition, as some local lenders won’t provide that level of service to new LO’s.

As for a business plan, keep in mind this is speculative as I’m still new to the industry... I️ would suggest you decide what market you’d like to capture and organize exactly how you plan to capture that market. For example, in Arizona where I️ live, there is a growing number of homes being built in a certain area and many of the agents don’t have a local lender they refer too. Most just tell their clients to call their bank for a prequalification. Perhaps there’s an area in your state where there are no Loan Officers available or none who spend time with those communities. If that’s the case, capitalize on the opportunity and see where it takes you, then refine your plan along the way.

Hope this helps and best of luck to you!

-Tony

[Greg Betts]

A big THANK YOU to everyone on here, great information. 

Here are some of the goals and expectations we've discussed for the first year.

Base pay for 6 months

2 months of training while obtaining my license

Fund 4+ million

1.3% on all loans

Does that sound reasonable?

[Tony Le Claire]

Hi Greg,

How much is the base pay for the six months? 

Two months of hands on training while you study for your SAFE exam is sufficient to get acquainted with your community, realtors, etc. so long as you are assertive during that time.

1.3% or 130 basis points as it’s referred to as is definitely good, some brokers might pay more but will make you pay for your own marketing, pay for your leads, pay for your credit reports, etc. Make sure to find out what costs they are covering as well.

[Greg Betts]

Tony, sorry for the delay. I didn't see a notification regarding your response. My base for the first 6 months is 20k. Is that competitive?

[Tony Le Claire]

Hi Greg,

My apologies as well for the delay! 20k for 6 months is roughly $19.23 per hour which is definitely good for a base pay in this field. Did the company mention if it was a draw income or if it is essentially a "freebie"? Draw income basically means they pay you the base but when you receive commission you pay back the income received until you are eventually straight commission. Freebie would of course mean they are paying you the base salary with no expectation of pay back down the road.

Thanks and happy holidays!

Tony

[David Barajas]

Hello, 

If I become a loan officer, would it be out of the question to be paid as a 1099 and not w2? For example, being a loan consultant? 

Thanks!

[Gordon Cuffe]

@David BarajasMost loan officers are commission only 1099 workers. I think the only places that are paid via w2 are credit unions and some banks. In order to become a loan officer, a person needs to obtain their Nmls license.

[David Barajas]

@Gordon Cuffe great! Thanks Gordon.