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Loan Processor vs. Underwriter: What Are the Differences?

Learn about the two careers and review some of the similarities and differences between them.

A loan processor and underwriter are both positions in the financial industry that work with loan applications. A loan processor is responsible for collecting and verifying the applicant’s information and documentation, while the underwriter evaluates the risk of the loan and decides whether or not to approve it. If you’re interested in a career in finance, learning about the similarities and differences between these two positions can help you decide which one is right for you.

What is a Loan Processor?

Loan Processors are responsible for collecting and verifying the required documentation for mortgage loan applications. They work closely with loan officers, underwriters and borrowers to ensure that all information is accurate and complete. Loan Processors review employment history, credit reports, tax returns and bank statements to determine if an applicant meets the minimum qualifications for a loan. They also calculate income and debts to determine the maximum loan amount the borrower is eligible for. Loan Processors keep track of deadlines and follow up with borrowers or loan officers to obtain missing information. Once all documentation is collected, they prepare the loan file for underwriting.

What is an Underwriter?

Underwriters are responsible for assessing the risk of insuring a company or individual. They use their knowledge of the insurance market to determine whether or not to provide coverage and at what rate. Underwriters review applications and supporting documentation to determine whether or not the applicant is eligible for coverage. They also evaluate the applicant’s risk factors to determine the premium that should be charged. Underwriters may work for insurance companies, government agencies or self-insured organizations.

Loan Processor vs. Underwriter

Here are the main differences between a loan processor and an underwriter.

Job Duties

Loan processors help to speed up the loan approval process by collecting and verifying information from applicants. They then pass this information along to underwriters for review. Underwriters use the data provided by the applicant, as well as other research, to determine whether or not a borrower is likely to repay their loan successfully. The job of an underwriter involves more in-depth analysis than that of a processor.

Processors may have more varied duties than underwriters, who typically perform the same tasks on each application they review. For example, a processor might contact an applicant to request missing information, while an underwriter might deny an application based on their initial review.

Job Requirements

Loan processors and underwriters typically need at least a bachelor’s degree in business, finance or another related field. Some employers prefer candidates to have a master’s degree as well, but it is not required for entry-level positions. Additionally, many loan processors and underwriters pursue certifications through the Mortgage Bankers Association (MBA) or the National Association of Mortgage Processors (NAMP). These organizations offer training programs that teach professionals how to use mortgage software and other tools they might need on the job.

Work Environment

Loan processors work in a variety of environments, depending on the type of company they work for. Some companies may have their loan processors working from home or remotely while others may require them to travel to meet with clients and attend meetings. Underwriters typically work in an office environment where they can access all necessary information about a client’s loan application. They also spend most of their time at their desks reviewing applications and making decisions about whether or not to approve loans.

Skills

Both loan processors and underwriters need to have excellent attention to detail because they will be reviewing a large amount of financial documentation. They also both need to have strong organizational skills to keep track of all the different loan files they are working on.

Loan processors need to have good customer service skills as they will be interacting with loan applicants and answering any questions they have about the process. They also need to be able to multitask as they will be working on multiple loan applications at the same time. Underwriters also need to be able to multitask as they are reviewing multiple loan applications, but they do not necessarily need to have strong customer service skills as they will not be interacting with loan applicants directly.

Underwriters need to have a strong understanding of financial concepts as they will be evaluating an applicant’s ability to repay a loan. They also need to be able to use software programs to run credit reports and calculate debt-to-income ratios. Loan processors do not need to have as strong of a understanding of financial concepts, but they do need to be able to use software programs to input data and generate documents.

Salary

Loan processors earn an average salary of $48,841 per year, while underwriters earn an average salary of $68,337 per year. Both of these salaries may vary depending on the size of the company at which you work, location of your job and the level of experience you have prior to pursuing either position.

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