Whether you’re buying a home or refinancing, you’ll likely come across the term mortgage loan originator. Knowing who they are and what they do can be helpful. A mortgage loan originator refers either to the financial institution offering the mortgage or an officer employed by the lender who helps you through the mortgage loan process.

In this guide, we’ll provide you with detailed information about what a mortgage loan originator does, what it costs, and how to choose the right one.

What Is a Mortgage Loan Originator?

A mortgage loan origination can be the financial institution or lender that sells mortgages or a person employed by them who helps you get a mortgage.

“Just like working with anyone at the top of their profession, having a well-qualified mortgage loan originator can make the process stress-free and much easier,” shares Teresa Dodson, a debt expert and the founder of Greenbacks Consulting. 

These mortgage professionals help you through the application process by ensuring all the information is accurate, assisting you in finding the best product for your financial situation, collecting the documents, and helping you close on time.

Mortgage loan originators may be known by different names, such as loan officers or lending advisors. Their job is to help make the entire process smoother, from pre-qualification to closing.

Mortgage Loan Officer

Loan originators are also known as loan officers. Loan officers may work for mortgage brokers partnering with different lenders or for a direct lender, such as Rocket Mortgage or Wells Fargo. They can help you find the best loan product based on mortgage requirements, your goals, and your budget.

Types of Mortgage Loan Originators

There are two main types of mortgage loan originators, and each works in a slightly different way.

Mortgage Banker

Mortgage bankers can originate all types of mortgage products and help you get pre-approval, fill out a mortgage application, collect your documents, provide you with loan options you qualify for, and help you at closing.

They’ll be your main point of contact from start to finish and will help you find the best rates from the various lenders they have relationships with.

Mortgage Broker

Mortgage brokers are independent professionals who act as an intermediary between you and mortgage lenders. When you approach a mortgage broker, they collect your financial information, help you find the best lender for your needs, process your applications, and collaborate with the lender. Mortgage brokers aren’t employed by lenders, but they do get commissions from them.

What Do Mortgage Loan Originators Do?

Mortgage loan originators can help you in a number of ways. We’ve listed some of their main responsibilities below:

  • Answering questions about the process. 
  • Collecting and verifying your documents. 
  • Providing estimates of your interest rate and loan amount. 
  • Collaborating with your real estate agent. 
  • Helping you get a mortgage pre-approval.
  • Helping you choose the right type of mortgage, term, and interest rate based on your credit score. 
  • Assisting you with the key closing documents, such as the promissory note and Deed of Trust.

Do Mortgage Loan Originators Need a License?

Before you take on any new mortgage debt or refinance an existing loan, it's important to know that there are several types of mortgages, each with different terms and qualification requirements. A mortgage loan originator needs to have in-depth knowledge of your state’s residential mortgage industry.

Nationwide banks have federal registrations, so their loan originators don’t need a mortgage loan originator license (MLO license). However, credit unions and other mortgage companies need state licensing as per the SAFE Act. Mortgage loan originators need to get a loan originator license for the state in which they work.

Licensing requirements include pre-licensing education, passing the SAFE Mortgage Licensing Act from the Nationwide Multistate Licensing System (NMLS), continued education, and a criminal background check.   

How Much Do Mortgage Loan Originators Cost?

Loan origination fees are a part of the closing costs in real estate transactions. This fee covers the administrative and processing work done by the mortgage loan originator. Loan origination fees are usually 0.5% to 1% of the loan amount.

When you apply for a mortgage, you’ll receive disclosure forms. These forms will include information on origination fees as well as other closing costs.

How To Choose a Mortgage Loan Originator

If you’re in the market for refinancing or getting a mortgage, a good mortgage loan originator can make the entire process as stress-free as possible. However, it’s also important to shop around to find the best rates. Here are a few tips on how to find the best mortgage loan originator:

  • Speak with multiple loan originators and ask about their experience.
  • Ask family and friends for recommendations.
  • Work with a loan originator who is easy to communicate with and answers questions promptly.
  • Pick a mortgage loan originator who has your best interests in mind and who isn’t pushy.
  • Don’t make a commitment if you’re uncomfortable. Don’t be afraid to say no or to ask for more time.
  • Get all the details you need to make an informed decision, such as the APR, fees, closing costs, loan amount, and discounts.

Get Professional Help for Your Mortgage Loan

Buying a house with a mortgage can be a confusing and complex process, especially for first-time homebuyers who may not know the key differences between a loan and a mortgage. Picking the right mortgage product, finding the best rates and loan terms, and making sure your financials are all in line are important, and a mortgage loan originator can help.

Loan originators can be the lenders that offer mortgages, as well as those who facilitate the application process. These loan officers can help guide you through the process and find the best mortgage rates.