Everything You Need To Know About Mortgage Loan Originators

‍$777 billion worth of mortgage loan originations took place through the first half of 2024. As a new homebuyer, it's likely you'll need help in this process. A mortgage loan originator (MLO), is a person that helps you through mortgage loan originations.

A mortgage originator is employed by a lender. Their primary purpose is to help borrowers with the mortgage application process. They will solicit, negotiate, and explain a loan; however, they cannot approve a loan. If you want to help find a reliable lender, reAlpha will guide you to some vetted mortgage lenders.

An MLO is an important individual who assists potential homebuyers in getting a home loan. The mortgage originator will assess the buyer's finances and recommend a mortgage loan. They work to make the entire mortgage process smooth and swift.

The MLO can be anyone who works for a bank, credit union, or lending institution. Some of them get a salary, but most of them get compensation for their work.

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A mortgage loan originator helps borrowers from the initial inquiry to the closing of a mortgage application. This requires the MLO to look into certain information, which includes:

• An assessment of the borrower's financial health is needed to determine loan eligibility.
• Find the purpose and understand the needs to determine the loan option that makes sense for you.
• Assist in collecting the documents necessary for the application.
• Present loan offers, including interest rates and terms.
• Offer personalized advice and guidance.
• Assist you with the legal clauses of the loan agreement, ensuring the agreement terms are in accordance with mortgage policy.

The mortgage originator is a representative of the lender, but they will not approve your loan application. This part depends on the mortgage lender, who will evaluate your risks as a borrower.

There are two major types of MLOs: bankers and brokers. Let’s look at them below:

• Mortgage banker- A mortgage banker works directly with the lender. The mortgage loan officer is a point of contact between you and the lender’s institution.
• Mortgage broker- A mortgage broker is not employed by a lender. They are independent professionals who act as a contact between you and the lender of your choice.

When you want a mortgage, you can choose between a mortgage lender or a loan originator. It can be tempting to select the person you originally reached out to; however, it's important to shop around before you make the choice. Here are some tips to evaluate your options.

• Get Loan Details- Finding the loan information, like the interest rate and APR should be at the top of your list. You should also ask for any perks or discounts that you get with the deal. This parameter can help you compare lenders and the mortgage offers that you get with it.
• Evaluate and Stand Your Ground- It is important to look for options when an MLO offers a quote. If they are a bit pushy, you can compare the loan options and check out the rates the originator offers. Never crumble under pressure, as a mortgage is a big financial burden, and it is good to be thorough.
• Choose an MLO you are Comfortable with- Work with a person that you are comfortable working with. If you don’t understand what they are saying or are not comfortable asking questions, they are not a right fit. Before you start, discuss the communication style and how often can you get updates. You can also ask for testimonials from previous clients to better understand their work.

Keeping these tips in mind can help you find the right MLO. At the end of the day, the right person should have your best interest in mind.

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A mortgage loan officer commission varies on an array of factors. Some of them include the loan amount, the complexity of the transaction, and other policies.

Here are a few service fees an MLO charges:

1. Origination fee- The originator charges a fee to process and facilitate a loan. Generally, it is a percentage of the loan amount, ranging from 0.5% to 1% of the loan.

2. Mortgage points- It is a fee paid upfront to the loan originator to get a lower interest rate on the loan. Each point is the 1% loan amount, but the number of points and cost vary.

3. Broker fees- Mortgage originators may work as brokers in certain cases. They can charge a fee which can be a certain percent of the loan fee or a flat fee.

4. Processing fees- In some cases, they may charge fees for processing the loan application, like appraisal fees, and credit report fees.

A mortgage loan originator can help you with the mortgage process when you decide to buy a house. Make sure that they have an NMLS license and can offer you the best deal.

If you are looking to get a mortgage on your house, you need to find a reliable lender.

A mortgage loan broker is an individual who acts as an intermediary between a borrower and a mortgage lender. However, they don’t use their own funds or finalize the mortgage.

Yes, since 2008, mortgage loan officers need to have a license. The licensing requirements vary from one jurisdiction to the other.

A mortgage loan originator can be employed by a lender. However, they can also earn a commission from origination fees, mortgage points, or processing fees.

Find the Perfect Mortgage for Your Dream Home with Be My Neighbor.

Compare options, calculate payments, and get expert guidance - all in one place.

       Get Pre-approved