The Pros and Cons of Starting a Career in Mortgage Lending
There’s never a bad time to move into the mortgage industry. As it turns out, the mortgage industry is fertile ground for those looking to shift into something that’s new, lucrative, and actually makes a difference in other people’s lives.
With that said, switching careers is never easy, but nothing in life that’s worth doing ever is. This guide will help give you an idea of whether or not joining the mortgage industry is a good direction for you.
It’s no surprise that there are plenty of positives when it comes to working in the mortgage industry. From helping potential homeowners to paving your own path to success, the multitude of benefits include (but are certainly not limited to) the following:
Help People Make Life-Changing Purchases
Real estate is undoubtedly one of the building blocks of both personal and multi-generational wealth. Using real estate, borrowers are able to build equity in an appreciating asset and borrow against it if need be — such as in the case of sending a child to college. As a mortgage professional, you’re the one who ultimately makes homeownership possible and your work can pay off for generations to come.
Multiple Career Paths
In the mortgage industry, there’s no one path to success — there are multiple. In this industry, you’ll be able to find your niche, whether that’s working with an established financial institution such as a bank or credit union, a fast-paced mortgage brokerage firm, your own mortgage brokerage firm, or if you want to work as both a real estate agent and a mortgage professional (serving other real estate agents). The possibilities are endless.
High Earning Potential
One of the best aspects of a mortgage career is the limitless earning potential. Mortgage Loan Originators and Mortgage Loan Officers (both referred to as MLOs) usually make approximately 1% of the total mortgage amount in commission. On a $500,000 mortgage, the commission would be $5,000 — not bad for a single mortgage issued! Close a few of those every month, and you’ll be doing well. Of course, it takes time to work up to that point and market conditions vary around the country. According to the U.S. Bureau of Labor Statistics (BLS), Mortgage Loan Officers make roughly $63,960 per year as of November 2021. However, ZipRecruiter's up-to-date data shows that MLOs around the country have an average salary of $74,838 per year.
Did You Know?
The titles “Mortgage Loan Officer” and “Mortgage Loan Originator” are often used interchangeably, including in the summary above.
Flexible Schedule and Work-Life Balance
The mortgage industry affords significant freedom and flexibility. As a mortgage professional, you can structure your days around the things in your life that matter to you. Now, that’s not to say that success doesn’t require a regular work routine and availability, but compared to other industries, a career in the mortgage field is much easier to tailor to your lifestyle.
Regardless of what’s going on in the world, there’s always a need for real estate and therefore a persisting, consistent need for mortgage professionals. As local real estate markets grow, so too does the demand for mortgage professionals.
No industry is without its challenges. The good thing is that they can all be overcome with the right amount of perseverance and poise. The mortgage industry, more so than others, rewards those who understand that success takes time, commitment, and hard work.
Starting a New Career at Entry Level
It can be terrifying to build a new career from the ground up, but that’s the nature of investing in a new direction. As is the case with any industry, it may take a year or two to learn the ropes and grow your customer base. If this is your first time working in a sales-driven environment, remember to remain persistent in your goals, work consistently, and good things will likely come.
You Are Solely Responsible for Your Income
To get something out of a mortgage career, you have to put a whole lot of sweat equity in. In the mortgage industry, it’s possible that you’re solely responsible for generating your own income (though that’s not always the case depending on the brokerage for whom you’ll work initially). On the flip side, that level of responsibility largely affords the scheduling flexibility that many MLOs enjoy.
Prospective Clients Have Options
Becoming an MLO is undoubtedly a fantastic career move that can pay off for those who invest the time and effort, but it also means that there’s competition in the space. When it comes time to secure lending, clients have options to choose from, so networking and building a loyal client base is key to long-term success.
Highly Regulated Industry
Due in large part to the Global Financial Crisis of 2008, regulators passed the Secure and Fair Enforcement for Mortgage Licensing Act or SAFE Act. The legislation, which sets nationwide education standards and requires MLOs to register in a national database, is intended to prevent questionable lending practices that can destabilize secondary mortgage markets. As a result, all licensed mortgage professionals must take Continuing Education annually to stay up to date on industry regulations.
To get a good feel for the day-to-day life in mortgage services, we recommend using LinkedIn to find and follow a mortgage mentor whom you can shadow. That way, you can experience firsthand what your new career might be like before becoming a full-time mortgage pro.
Different Jobs Within the Mortgage Industry
There are many different career paths and job openings within the industry that include but are not limited to:
- Mortgage Broker: A Mortgage Broker is someone who doesn’t work for any particular lender but rather a brokerage firm that shops various mortgage lenders' interest rates and loan options on behalf of the client. Mortgage Brokers are usually commission-based.
- Mortgage Loan Originator: A Mortgage Loan Originator is usually any licensed individual who initiates a home loan. Loan Originators typically work with mortgage companies in which the origination, processing, and underwriting of the loan are all completed in-house.
- Mortgage Loan Officer: A Mortgage Loan Officer is a licensed mortgage professional who issues loan products on behalf of a bank, credit union, or other financial institution. Many times, Mortgage Loan Officers earn a base salary plus commission (albeit less of one) and are required by the institution to possess a bachelor's degree.
- Underwriter: Sometimes referred to as a credit analyst, this role determines the creditworthiness of the borrower.
- Mortgage Loan Processing Assistant: This individual helps ensure that all the administrative tasks related to the mortgage lending or refinancing process (e.g. the loan application) are completed. This role offers a great way to get a feel for the nature of various mortgage jobs before fully committing.
Mortgage Loan Originator Skills and Characteristics
The mortgage business serves borrowers of all kinds and offers careers fit for all walks of life. However, those with certain skill sets will find that this business comes naturally to them.
Generally speaking, those with a financial or sales background (think financial advisors), customer service background, or the entrepreneurial-minded who enjoy working with people and can stay organized will likely see success as mortgage professionals. Of course, anyone with enough dedication, great communication skills, and the ability to put their clients' needs first can make the absolute most of the mortgage business.
How to Switch Careers and Become a Mortgage Loan Officer
Perhaps your current career doesn’t offer you enough opportunities. Maybe you don’t feel like you’re reaping the benefits of your own hard work and long hours. If you’re feeling this way about work, then it’s time to reevaluate your path and consider making a career change. If that change happens to be into the mortgage industry, here are the steps you’ll need to follow:
- Ensure you meet the prerequisites:
- Be 18 years of age
- Possess a high school diploma or GED
- Be able to pass an FBI background check
- Be able to legally work in the United States
- Register with NMLS and submit your fingerprints
- Research your particular state’s Pre-Licensure Education requirements
- Choose your education provider
- Complete all required coursework and pass each course’s final exam
- Pass the SAFE MLO licensing exam
- Apply for your mortgage license, submit your credit report, and get a surety bond (once you’re hired)
The final step is simply to remember why you’re embarking on this journey. Is it to spend more time with loved ones? Is it to find economic prosperity? Or is it because you want to help homebuyers with one of the most financially important events in their lives? Whatever the case might be, remember your “why” and you’ll have the drive you need to power through your career change. Good luck!