What is a Loan Processor?
A Loan Processor, also known as a Mortgage Loan Processor, is responsible for preparing the mortgage application, including the entire paperwork, and delivering it to the mortgage underwriter for review. The paperwork refers to all the documents needed for the loan application, including bank statements, pay stubs, W-2 forms, and credit report explanations.
In other words, a loan processor is a crucial player that connects a borrower on one side and a mortgage underwriter on the other side.
A Loan Processor Job Description
Being a loan processor is not an easy job to be taken for granted. Loan processors have a huge responsibility in loan processing and play a significant role in providing services by financial institutions. Let’s learn more about the concrete activities they are in charge of.
The loan processor is a link in the chain of command that works with a loan officer to ensure that the loan documentation is prepared and on track according to the lending guidelines for the selected loan program.
Bear in mind that the loan processors do not have the authority to give you any advice regarding the loan process, your credit score, or closing costs – their main job is to collect the loan documents and prepare them for the loan officer – a legally authorized person to answer all of your questions.
Mortgage lenders usually open a loan processor job position to help them keep track of the vast number of documents submitted through the loan application. You can find personnel with a Loan Processor job title in multiple institutions: banks, real estate, mortgage companies, and similar.
Their job description requires them to work in close synergy with the loan originator, title, and escrow companies. Loan processors follow a document called — a mortgage loan processor checklist — that is prior adjusted by the mortgage lenders. The expected output produced by every loan processor is complete loan documentation needed for successful loan approval.
The loan processor’s job description does not consist of a plane collection of the documentation and its submission. On the contrary, loan processors are in charge of double-checking all the borrower’s documents and information for a loan to be approved.
Some might say that the loan processors play a crucial role in the loan approval process. They correct all of the possible loan originator’s mistakes before the files are being submitted for underwriting.
Their job does not end after the application submission. In case of loan approval, loan processors receive a checklist of prior-to-document conditions (PTDs) that need to be met. Loan processors — in synergy with the loan originator, title, and escrow companies — are obliged to collect all the loan files and fulfill the conditions before the bank release the loan documents.
Key responsibilities of a Loan Processor
A loan processor’s job description can be narrowed to seven key responsibilities.
Review of the financial documents
Even though it is a loan officer who receives the loan application, a loan processor is the one who will be going through all of the documents and checking whether they meet the criteria. This might include additional documents correspond, such as employment information, earnings calculation, and similar. If they notice a mistake, they will be working with the borrowers to help them make the corrections before forwarding it to the underwriters.
Collecting letters of explanation
This responsibility refers the most to the credit score check. Every loan processor is obliged to check the credit score and ask for letters of explanation if needed. This includes an outdated address, late payments, unpaid child support, past bankruptcies, and similar. If necessary, loan processors can request the court to ask for private – yet relatable documents that are not reachable through the public record databases.
Request a written verification of loan application information
Granting a loan is a big responsibility that can become a risk if not approached carefully. That’s why loan officers might request a written verification of loan application information.
It is usually the underwriters who require written verification of employment or the bank accounts. Loans backed by the Federal Housing Administration (FHA) hold the right to require certain documents for verification. It is a loan processor’s job to ensure these documents are provided.
Collect title work and appraisals
If someone applies for a home loan, they will be working with a loan officer or a mortgage broker. Of course, all with the assistance of a loan processor who is in charge of collecting the information about the buying property and ensuring it is free of any ownership claims.
If it is determined that a home appraisal is needed, the loan processor will be the one scheduling it with an appraisal company in a timely manner.
Co-work with the underwriter
If a borrower receives a condition loan approval, the loan processor is in charge of collecting any outstanding documents needed to resolve them. They are also making the required changes and finalizing the loan package – this includes activities from correcting a misspelling to contacting the homeowner’s insurance company for additional information.
Ensure everything is on time
The time is money — as we all know and like to say — so let’s make sure we get the most of it. Loan processors are the ones in charge of ensuring everything is running smoothly and within the deadline. They also track the mortgage rate lock expiration date, so the borrowers can close on time and avoid lock extension fees.
Prepare the loan application for closing
Once everything is set, and the loan has been approved, it is time for closing. Loan processors play a huge role here, as they are working with escrow companies to get all the paperwork ready for closing. This includes scheduling the signing, verifying the cash amount needed for the down payment and closing costs.
As you can see, being a loan processor is not as easy a job as it might seem at first glance. Even though a loan officer or a mortgage broker is the one in charge of granting the loan, loan processors assist the loan originator in selling the product and preparing the loan file. It is no coincidence that they might become the borrower’s main point of contact.
An average salary of a Loan Processor
Different factors determine an average salary of a loan processor. It usually depends on the hiring organization, their location, and specific requirements in the job posting.
According to the Indeed Database, this is the average salary of a loan processor in the United States:
- Standard salary in the U.S.: $45,316 per year
- Some salaries range from $39,284 to $80,909 per year.
What do you need to become a Loan Processor?
Being a Loan Processor is a responsible role, so there are quite a few requirements to be met by anyone applying for the position. This is the level of education and set of skills is required for being a loan processor.
Education
A high school diploma or GED is required, but most employers prefer a bachelor’s degree in accounting or finance. If you have a bachelor’s degree in business administration or real estate, you still have a chance with some employers.
You can also consider pursuing certificate programs for loan processing that teach you about underwriting principles, the loan processor duties, the approval process, basic appraisal principles, and similar.
Training
The best training for this position is done through the practical experience of being a loan processor. Some employers offer flexible working hours so that the students can start working as loan processors even before they finish the studies. That’s how you will ensure to receive all the necessary training for the job.
Certificates
Certificates are not necessary for you to become a loan processor. However, they can be a big plus not only in job hunting but also in job execution. The certification process is through the National Association of Mortgage Processors, and they offer three levels of certification: Certified Purple Processor, Certified Master Loan Processor, and Certified Ambassador Loan Processor.
Skills
The skills are the easiest part as most of them can be gained throughout life in different fields. To become a successful loan processor, these are the highlighted skills you’ll probably need:
- Organization
- Detail – orientation
- Communication
- Data entry
How to become a Loan Processor?
Now that you know what you need to become a loan processor, this is the final piece of advice on becoming a loan processor.
Complete your education
Do your homework and complete the education needed for pursuing a career as a loan processor. A diploma from an accredited college would be beneficial to show advanced preparation, get you an internship during your studies and give you an advantage amongst other candidates.
Gain working experience
As mentioned before – you will receive the best training by doing the job. Look for an internship while finishing your studies, and make sure that you already have around two years of experience being a loan processor by the time you finish college.
Career advancement
If you are an ambitious young person looking for career advancement, make sure you do all the necessary things to get one. This might include additional learning and gaining knowledge and skills through different courses and working experience. Look for accredited programs to verify the relevance of your further education.
Loan processor in comparison with similar professions
Now that you completely understand the role of a loan processor, we want to offer you a comparison with similar occupations so you get an even deeper understanding.
Loan processor vs. underwriter
A mortgage loan underwriter is in charge of assessing whether the borrower meets the guideline for the home loan they have requested. This means that the underwriter is responsible for approving, suspending, or denying the loan after analyzing whether the loan applicant can repay the loan using the assets, credit, employment, and income documents the loan processor had previously submitted.
A mortgage underwriter is also responsible for checking that the appraised home value makes sense and that the property’s title transfers without any issues. A loan processor communicates any issues that appear in this process, being a bridge between an underwriter and the borrower.
Loan officer vs. loan processor
Loan officers are licensed to work with clients by originating mortgages in the states they do business in. Their primary responsibility is to legally advise the borrowers on the lending process, loan program, interest rates, and loan terms.
They are also in charge of providing anything requested by a loan processor on behalf of a mortgage broker, mortgage banker, or an institutional bank.
Why you shouldn’t become a Loan Processor
This sentence probably got you thinking about what’s coming next. That’s good because we want to challenge your desire to pursue a career as a loan processor and introduce you to the concept of Infinite banking, where you could become your own loan processor.
What is Infinite Banking?
There are many things that we could teach you about Infinite banking, but for these purposes – we’ve summarized the essential facts you should know.
The concept of infinite banking is about strategically using your whole life insurance policy from a mutual insurance company as a personal endless banking system. In other words, Infinite Banking is essentially being your own banker.
One of the many benefits of a whole life insurance policy is that policyholders can borrow money using their policy’s cash value.
Using this borrowing setup, you would never have to borrow money from a bank again and instead would borrow for yourself (your whole life insurance policy) and pay yourself back over time. Thus, being your own bank.
The goal of Infinite banking is to duplicate the process as much as possible to build the value of your own bank. The duplication process happens by lending and repayment of money typically held in the cash value of a permanent life insurance policy.
Infinite banking allows you to better work towards your individual and unique financial goals for yourself and your family and have control over your finances without dealing with banking fees or interest rates on loans.
The way infinite banking works allows you to mimic the way a bank operates and borrows money. Instead of borrowing from a bank, you borrow from yourself while still allowing your whole life insurance policy to earn dividends (money) even though you are using that money elsewhere.
How to become your own banker
To become your own banker, you need to start implementing the concept of infinite banking.
Infinite Banking involves:
- Overfunding (with after-tax funds) a high cash value whole life insurance policy from a life insurance company
- Accumulation of Cash Value(tax-free) throughout the years you are a policyholder of your Whole Life insurance policy
- Tax-Free Loans taken out against your whole life insurance policy’s cash value to use for your financial expenses.
If you want to learn more about becoming your own bank, you can check our YouTube video — How To Start Infinite Banking — to learn about steps you need to follow to start with infinite banking.
Final thoughts
So far, you have been acquainted with the term of a loan processor. If you’ve come to the end of this article, you already know what’s the job description, as well as what’s needed for you to become one.
Good luck on your wealth journey!