Understanding the Role of a Loan Processor in the Mortgage Industry

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The mortgage industry is full of career opportunities. One type of job you might not hear much about but plays an important role in any mortgage is the loan processor. It might sound similar to the more well-known position of loan officer, but a loan processor’s job looks very different. But what is a loan processor?

Defining the Role of a Loan Processor

A loan processor, also known as a mortgage processor, is an individual who is responsible for putting together, administering, and processing your loan application paperwork before it gets to the step of reaching a loan underwriter (You can learn more about what the underwriter does here). As mentioned, they play an integral role in getting your mortgage loan request to the closing stage.

Key Responsibilities of a Loan Processor

The everyday work varies from company to company, but the big picture will look similar across the industry. Loan processors collect paperwork from clients, also called applicants. They are then tasked with organizing this paperwork then reviewing the documents for missing information and mistakes before it goes to a bank and onto an underwriter. One of the best things a loan processor can do to make themselves valuable is to hone their ability to identify red flags as early on in the process as possible.

Loan processors follow a step-by-step process of taking a loan from application all the way to closing. As part of the process, loan processors will order appraisals and titles, verify employment and insurance, and then send the application and paperwork to the lender, with the goal of getting a loan approved. Once the loan is approved, the loan processor continues to collect additional documents and follows up on anything they ordered, such as the appraisal.

A very important part of a loan processor’s job is communicating with all the parties that play a role in the process of home buying, such as appraisers and employers. Another is working with loan officers to ensure that everyone involved in the process is getting the tasks they need to do and meeting deadlines in order for the loan process to keep moving forward without incident. As such, relationship building is a key part of the job.

Earning Potential of a Loan Processor

The salary will vary from company to company and from location to location.

Looking at the big picture, the median salary of a mortgage loan processor is $40,598 per year, according to the National Association of Mortgage Processors.

Obviously, there are people making more and making less than that figure. There also is the potential to earn bonuses as a loan processor, so that may add anywhere from $2,000 to $15,000 to your annual salary depending on the size of the company you work for and its bonus structure.

When it comes to paying, it’s also important to consider benefits. That includes the usual offerings of healthcare, dental care, and life insurance. Flexibility also is a benefit that’s worth exploring as you weigh job options. Some companies allow loan processors to have a hybrid work schedule—part-time in the office, part-time at home—while other companies let their processors work from home full time.

Essential Qualities for a Successful Loan Processor

Like any job, there are people that would be a great fit and a bad fit for becoming a loan officer.

Someone who’s organized to be efficient and productive will be more likely to succeed as a loan processor, as would someone who is systems-oriented and enjoys coming up with and following processes and procedures.

While loan processors aren’t really the salespeople of the mortgage process, it’s still important for them to be the type of people that are able to build relationships with many players in the process, from clients to referral partners to underwriters.

Steps to Becoming a Loan Processor

When it comes to educational requirements, the minimum for a loan processor is typically a high school diploma. You don’t need a college degree to land a job as a loan processor, though it can be helpful. If you have or plan to pursue an advanced degree, it’s recommended you get at least an associate degree in a related subject, such as finance, banking, or business.

Loan processor requirements do vary depending on where you work. A key step you’ll want to take is pursuing pre-training and licensing from the Nationwide Mortgage Licensing System and Registry (NMLS). That’s the national agency responsible for overseeing mortgage professionals in the United States. You’ll need to pass an exam in order to receive your mortgage license. The process of doing so will vary from state to state. Acquiring your license isn’t necessary for every loan processor position but can prove useful down the road if you think you might want to pursue other positions within the mortgage industry.

Once you’ve handled your NMLS tasks, it’s time to find, apply for, and get hired. If you land a loan processor position, you’ll receive on-the-job training that will help you understand the intricacies of the mortgage industry and give you a foundation of knowledge you can take with you as you advance in your career.

What does a career path look like for someone entering the mortgage industry as a loan processor?

Being a loan processor can be a fulfilling career in and of itself, but some people use it as a stepping stone to other positions within the mortgage industry. And that’s OK! If you’ve obtained your NMLS license as part of your loan processor position, that opens up paths to several other positions within the industry, such as a junior loan officer, a loan officer assistant, or a loan officer. Other former loan processors go on to become operations managers, title agents, and more.

I’m ready to pursue this career! Any other tips?

Do your research. As with any job opportunity in any industry, you’ll discover not all companies are the same. It’s really important that you do your due diligence when you are taking a position as a processor somewhere, especially if you don’t have experience. That means you want to ask the right questions to ensure that you’re finding the best environment and team for you and your career goals. Some examples include:

• What type of training and onboarding would I receive?
• Will I have a mentor to help me?
• How many loans will I be handing in a month?
• What do your loan processing procedures look like?

Understand how you’ll get paid before accepting a job. As part of your due diligence, asking about pay and bonus structure is a must. Is your bonus is based on how many loans you close versus the value of you the loans you close? And is that measured on a monthly or annual basis? The answers to these questions might produce a very different bonus amount.

Think about the future and opportunities for growth. Advancing in your mortgage professional career will look different depending on where you’re working. A larger company might have more opportunities to move up, receive training, and provide professional development than a small company. On the other hand, at a small company, you may be working with someone who has been handling loans for decades and has plenty of wisdom to pass along. The key is identifying those opportunities and seizing them whenever you can. They’ll put you on the path to success.

Want to learn more about becoming a loan processor and about other job opportunities in the mortgage industry? Watch “What is a Loan Processor?”