What Does a Loan Officer Do?

Loan officers at banks, credit unions and mortgage companies evaluate, authorize or recommend approval of loan applications for people or businesses. They help guide borrowers through the application process and offer one-on-one assistance as applicants compare options.


A loan officer can spot inconsistencies in documentation or missed questions on an application that could delay the process. They also provide cost estimates that break down all the fees associated with a particular loan option.

Customer Service

A loan officer acts as the first person that a potential borrower can turn to for information about how to apply for a loan. This is especially true for mortgage loans, as the officer will usually meet with the client initially either face-to-face or over the phone to discuss their financial situation and determine whether they are a good candidate for a loan.

This initial meeting is often a good opportunity for the borrower to ask questions and receive expert advice about the type of loan that would best suit their needs. The loan officer is also able to make sure that all the required paperwork for a particular loan is filled out correctly. This can save the borrower time and money in the long run, as issues with paperwork can slow down the process of getting a loan.

Loan officers are usually licensed and adhere to the lending industry’s regulations, so they have comprehensive knowledge about the products their employer offers. They may also be able to recommend a specific product that will benefit a client’s individual situation, depending on their creditworthiness and other factors. As a result, the job of a loan officer can be rewarding and satisfying for those with a strong interest in finance and business. However, this role can also be stressful and demanding.

Knowledge of the Lending Process

Loan officers work with a variety of lending products, including lines of credit and different types of loans like mortgages. They must know the ins and outs of each product and be able to explain them to potential borrowers. They also need to factor in the creditworthiness of a borrower to determine what kind of product is best for them.

Loan process paperwork can be a lengthy and complicated process, particularly for mortgages. As a result, borrowers often have questions, and having a loan officer to guide them through it can save them time and money. Loan officers also know what documents are required to complete the application and can help borrowers fill them out correctly.

Having extensive knowledge of the lending process is a necessity for loan officers, who may be asked to evaluate and authorize or recommend approval of commercial, real estate, or credit loans. They must have the ability to assess a client’s financial status and review creditworthiness based on internal policies laid down by their employer.

It is common for a loan officer’s pay to be based on commission. This means they are paid on a percentage of each loan that is approved, with the commission fee for mortgage loans being the highest. This is an incentive for them to provide excellent service to borrowers, as it can increase their chances of getting repeat business and referrals.

Communication Skills

Having excellent communication skills is a must for loan officers, as they interact with clients, real estate agents, and other financial institutions on a daily basis. They must be able to effectively convey complex terms, including mortgages, loans, and compliance regulations, in a way that is easy for their audience to understand.

Loan officers must also be able to communicate clearly when explaining mortgage products and processes, as well as answer questions in a timely manner. This is important because borrowers are often stressed out during this process and need to feel like they’re being taken care of.

Another aspect of communication that is critical for loan officers is their ability to connect with their audiences and build relationships. This includes attending networking events, where they can meet potential clients and referral partners. It’s also important for them to keep in touch with their audiences through email marketing, such as recognizing their birthdays or homeownership anniversaries.

Lastly, loan officers must be able to think critically and solve problems in a timely manner. This is especially true for those who are working with millennials, who may have different perspectives or needs than their older counterparts. For example, if a client’s credit score or annual salary changes, the loan officer must be able to adjust the terms of their mortgage accordingly.

Cost Estimates

Whether working with homebuyers, small businesses or others seeking a loan, a good loan officer can provide a comprehensive list of options and a detailed cost estimate for each. This can save borrowers time as they shop for the best rates.

A loan officer’s job also involves examining an applicant’s financial documents and assessing their creditworthiness. Then the loan officer must decide what type of loan makes the most sense for the applicant. They must be able to make these decisions quickly and accurately.

In some cases, a loan officer may only offer mortgage products from the bank or other financial institution where she works. This can limit the variety of loan options available to a borrower, and it may also mean that the officer isn’t getting the best rates from other lenders.

Some loan officers work on commission, which means that they are paid a portion of the total loan amount when it closes. This can cause some loan officers to push for a higher rate than is in the interest of the borrower, simply to make more money. This kind of incentive structure can be a turnoff for some borrowers.