What is a loan officer?

Key points 

• A loan officer works at a bank, mortgage company or other financial institution and helps guide consumers through the process of obtaining a loan.
• Loan officers represent their financial institution’s interests and can’t influence whether your loan application will be approved (in underwriting).
• A loan officer can provide one-on-one assistance as you compare your financing options and submit applications.

If you’re looking to borrow money to purchase a home, start a business or for another purpose, you might work with a loan officer to apply for a loan.

Loan officers work at banks, credit unions, mortgage companies and other financial institutions to evaluate loan applications. They help guide you through the loan application process and may suggest products that would be a good fit for your needs.

Seeing as they work for the financial institution, though, loan officers don’t necessarily represent your interests. Here’s what to know about this professional.

What is a loan officer?

A loan officer works at a bank or other financial institution to evaluate, authorize or recommend the approval of a loan application. Most loan officers meet with would-be borrowers over the phone or in the office, though some travel to visit clients.

“Loan officers typically have a number of duties, including meeting with borrowers to discuss their financial needs and goals, evaluating borrowers’ financial situations to determine whether or not they qualify for a loan, discussing loan terms with borrowers and answering any questions they may have,” says Cliff Auerswald, president of All Reverse Mortgage.

Most loan officers have a bachelor’s degree in a related field and undergo on-the-job training from their employer. Depending on the type of loans they work with, loan officers may need a specific certification. Mortgage loan officers, for instance, must pass a national license test and take continuing education classes to renew their licenses on an annual basis.

Regardless of licensing requirements, loan officers are expected to have in-depth knowledge of lending products and banking industry regulations.

What does a loan officer do?

A loan officer’s responsibilities can vary depending on the lender and the type of loan. However, most loan officers advise you on the type of loan that would best fit your needs and how to go about applying for it.

A loan officer will typically review your qualifications to determine whether you could meet the lender’s qualifications. Assuming you’re cleared to proceed, the loan officer may prepare your application.

They can review the information you provide to make sure there aren’t any inconsistencies or skipped questions that could delay your loan closing. They can also let you know what documents to provide, including any letters of explanation for a red mark on your credit.

A loan officer can keep track of deadlines to ensure you submit everything in a timely manner. In the case of a mortgage application, for example, a delay could cause your interest rate lock to lapse or even threaten the home sale.

By keeping you on schedule, a loan officer can ensure your loan gets funded on time and help you avoid costly delays.

When do you work with a loan officer?

One of the most common scenarios when a consumer works with a loan officer is during the mortgage process. Mortgage loan officers can guide you through this complex process and help you understand your terms, rates and closing costs. Since mortgage applications involve a lot of moving parts, working with a loan officer could help simplify the process.

Mortgages aren’t the only loans that loan officers help out with, though.

“Loan officers can work with all types of loans, including mortgage loans, auto loans, personal loans and business loans,” says Auerswald. “However, they typically specialize in one type of loan. For example, some loan officers may only work with mortgage loans while others may only work with auto loans.”

While you can often complete these loan applications on your own online, you might be able to call or meet in person with a loan officer for additional support. If you’re not sure what type of funding you need, you could also contact a bank or other financial institution about meeting with a loan officer. The loan officer might discuss your needs, goals and financial objectives and offer advice on the best funding solution for your situation.

Can loan officers influence underwriters?

Loan officers typically can’t directly influence underwriters, since the two teams work separately from each other. However, a loan officer can help speed up the underwriting process by guiding a borrower through the application process.

Often, a skipped question on an application or missing documentation can delay the underwriting process. Loan officers make sure you have all your ducks in a row before the loan goes to underwriting (or review).

What’s more, a loan officer can spot any red flags that could hurt your chances of qualifying or saddle you with higher interest rates. The officer might advise you on how to improve your application, whether that means providing a letter explaining extenuating circumstances or applying with a creditworthy cosigner or co-borrower.

Tip: While a loan officer can’t influence whether or not your loan application will be approved, they can play a key role in determining your loan terms. Once you gain approval for a loan, it’s perfectly OK to negotiate terms directly with your loan officer. In the case of a mortgage, for example, you might ask your prospective loan officer to match or beat a competing offer’s APR. It never hurts to ask.

Frequently asked questions (FAQs)