Mortgage Loan Originator vs. Underwriter: What Are the Differences?

A mortgage loan originator (MLO) and an underwriter are both professionals in the mortgage industry. They work with borrowers to help them obtain financing for their home purchase. While an MLO originates the loan and works with the borrower throughout the process, an underwriter reviews the loan application and decides whether or not to approve it. In this article, we compare and contrast the job duties, education requirements and salary expectations for mortgage loan originators and underwriters.

What is a Mortgage Loan Originator?

A Mortgage Loan Originator is a loan officer who works with borrowers to obtain financing for their home purchase. They work with a variety of lenders to find the best loan terms for their borrowers. Mortgage Loan Originators typically work for banks, credit unions, mortgage companies and brokerages. They meet with borrowers to discuss their financial history and needs. They then work with the borrower to complete a loan application and collect the necessary documentation. Once the loan is approved, the Mortgage Loan Originator works with the borrower to close on the loan and ensure that all the necessary paperwork is completed.

What is an Underwriter?

Underwriters are financial professionals who work for banks, insurance companies or investment firms. They analyze financial information, such as income statements and tax returns, to assess the risks associated with lending money or providing insurance. They also review loan applications to determine whether the applicant meets the criteria for approval. Underwriters use their findings to make recommendations to their company about whether to approve or deny a loan or insurance policy. They may also negotiate terms and conditions of loans and insurance policies with applicants.

Mortgage Loan Originator vs. Underwriter

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

Job Duties

Although underwriters and mortgage loan originators both evaluate mortgage applications, their job duties differ. Underwriters assess the risk associated with a mortgage by evaluating an applicant’s financial history and current situation. They then decide whether to approve a mortgage or deny it.

In contrast, mortgage loan originators connect applicants with lenders by gathering information about them and submitting a completed application. They may also advocate for applicants during the underwriting process if they believe that an application should be approved.

Job Requirements

Mortgage loan originators typically need at least a bachelor’s degree in finance, business administration or another related field. They must also be licensed by the Nationwide Mortgage Licensing System (NMLS). To obtain a license, mortgage loan originators must complete 20 hours of pre-licensing education, pass an exam and submit to a background check. Some states have additional requirements for licensure as well.

Underwriters typically need at least a bachelor’s degree in finance, business administration or another related field. They may also need to be licensed by the NMLS if they plan to work for a federally regulated financial institution. To obtain a license, underwriters must complete 20 hours of pre-licensing education, pass an exam and submit to a background check. Some states have additional requirements for licensure as well.

Work Environment

Mortgage loan originators work in a variety of environments, depending on the type of company they work for. For example, some mortgage loan originators work for banks or credit unions and may spend most of their time working in an office setting. Other originators work for independent mortgage companies that offer services to clients looking to purchase homes. These originators often travel to meet with clients and provide them with information about mortgages.

Underwriters typically work in an office environment where they can access all necessary documents and perform calculations related to the loans they underwrite. Underwriters who work for large financial institutions may have more opportunities for advancement than those who work for smaller firms.

Skills

Mortgage loan originators and underwriters share some skills, such as customer service, math and attention to detail. However, they also have different skill sets that are necessary for their respective jobs. Mortgage loan originators need to be able to build relationships with potential borrowers and understand their financial needs in order to determine whether they qualify for a loan. They also need to be able to explain the loan process and terms to borrowers. Underwriters, on the other hand, need to be able to analyze financial documents to determine whether borrowers meet the requirements for a loan. They also need to be able to communicate with loan originators and other members of the loan processing team to obtain additional information or clarify details about a borrower’s application.

Salary

Mortgage loan originators can earn an average salary of $123,187 per year, while underwriters can earn an average salary of $68,337 per year. Both of these salaries can vary depending on the location of the job, the size of the company and the level of experience the employee has.