If you want to work in the banking industry, you may want to consider a career as a mortgage banker. This role helps initiate real estate loans so individuals and businesses can secure the funding they need for property ventures. Learning more about this role can help you decide if you want to pursue this career.
In this article, we explain what a mortgage banker does and provide relevant career information, including necessary skills and average salary.
What is a mortgage banker?
A mortgage banker originates real estate loans and provides the financial resources to fund them. A mortgage banker may work for themselves or a larger company, but their role is the same regardless of their employer. They make borrowers responsible for an origination fee so they can make the loan-originating process profitable for themselves or their place of employment.
Related: The Banking Industry: Definition, Trends and Key Terms
What does a mortgage banker do?
Here are some duties a mortgage banker has:
Review loan applications
A mortgage banker reviews loan applications to determine whether it’s a good idea for their place of employment to approve or reject a particular borrower. They may review factors like a potential borrower’s credit or employment history. For example, they may look for proof of a borrower’s steady income stream. If they can confirm that a borrower’s application has proof of consistent tax returns and pay stubs, they may feel more comfortable recommending the borrower for mortgage approval.
Advise borrowers on loan options
A mortgage banker can meet with potential borrowers to educate them on loan options. This employee’s financial institution may offer many loan products, so they can help a borrower decide between different options. They may give them educational resources like pamphlets to review on their own time and answer any questions they have to expedite the decision-making process. If a mortgage banker believes a borrower may receive approval for one type of loan product but not another, they may communicate this belief to the borrower so they can productively fill out loan applications.
Originate loans
A mortgage banker originates loans when a borrower receives approval for their desired loan option. This employee may be able to originate all mortgage loans that their financial institution offers. Some mortgage bankers specialize in the origination of specific categories of loans Veterans Affairs (VA) loans or jumbo loans that have unique requirements.
Service loans
After a mortgage banker closes a loan, they may be responsible for servicing the loan. When a mortgage banker services a loan, they oversee the borrower’s repayment plan. They may offer assistance if the borrower experiences challenges with fulfilling their repayment conditions.
Sell loans
Instead of keeping a loan for their institution, a mortgage banker may sell it to another financial institution or an individual investor. This process helps them access more funds so they can initiate new loans to additional borrowers. When a mortgage banker sells a loan, they may either sell the rights to service the loan or the loan itself.
Skills for a mortgage banker
Here are some skills and knowledge that a mortgage banker can have to experience success in their role:
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Knowledge of loan options
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Knowledge of federal financial regulations
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Research skills
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Marketing skills
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Customer service skills
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Interpersonal skills
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Written and verbal communication skills
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Computer literacy
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Mathematical skills
Mortgage banker vs. mortgage broker
While both mortgage bankers and mortgage brokers originate loans, their roles are slightly different. One difference is that mortgage brokers don’t underwrite loans, while mortgage bankers have this responsibility. Mortgage brokers also don’t provide funding for the loan, but mortgage bankers do. Instead, mortgage brokers only serve as intermediaries and unbiased third parties that help lending institutions and borrowers connect with one another. A mortgage broker may work with dozens of lenders to help borrowers decide on the best loan option, while a mortgage banker shows loyalty to one organization.
You can also better understand the differences between these two employees by learning about how they each participate in the process of closing a loan. A mortgage banker closes a loan through the organization for which they work. Alternatively, a mortgage broker only helps the borrower and lender arrive at a point where they both want to close the loan. Then, a mortgage broker transfers the responsibility of closing and funding the loan to the lender.
Mortgage banker vs. loan officer
The differences between a mortgage banker and a loan officer relate to categorization. A mortgage banker is a type of loan officer, but not all loan officers are mortgage bankers. In general, a loan officer works for a single mortgage lender or another type of financial institution. They can offer financial products that their place of employment offers and may alter the rates using guidelines that their employer establishes.
Salary for a mortgage banker
The average annual salary for a mortgage banker is $45,662 per year. This employee may qualify for a higher salary depending on their years of experience. They may also earn more depending on their specific employer and the location in which they work. For the most up-to-date salary information from Indeed, click on the link provided.
Job outlook for a mortgage banker
While the U.S. Bureau of Labor Statistics (BLS) doesn’t have job outlook information for mortgage bankers specifically, they have this information for loan officers. The BLS classifies a mortgage banker as a type of loan officer, so you can refer to a loan officer’s job outlook information for reference. According to the BLS, the job outlook for loan officers is 4% between 2021 and 2031.
This growth is close to the 6% expected growth for financial specialists. It’s also similar to the 5% expected growth for all occupations. The BLS anticipates a positive job outlook for mortgage bankers because of an increasing number of individuals and businesses who want to purchase real estate property for personal or commercial reasons.
Work environment for a mortgage banker
A mortgage banker usually works for a financial institution like a bank, a loan association or a credit union. They typically spend most of their workday in the institution’s loan department where they interact with borrowers like aspiring homeowners and realtors. A mortgage banker can expect to work a normal 40-hour workweek during normal business hours, but they may work some overtime hours to process a high volume of loan applications or address clerical errors that may affect a borrower’s financial situation.
