Underwriter vs. Loan Officer: What Are the Differences?

A career in the financial industry can be both lucrative and rewarding. Two common positions in this field are that of an underwriter and a loan officer. Though these positions share some similarities, there are several key differences between them.

In this article, we discuss the differences between an underwriter and a loan officer, and we provide additional financial professions you may be interested in pursuing.

What is an Underwriter?

Underwriters are responsible for reviewing and approving loan applications for banks and other financial institutions. They carefully review each application to ensure that the borrower meets the necessary criteria for the loan and that the loan is a sound investment for the bank. Underwriters also calculate the risk of default for each loan and determine the interest rate that the borrower will pay. In some cases, Underwriters may negotiate terms with the borrower in order to reduce the risk of default.

What is a Loan Officer?

Loan Officers are responsible for evaluating, authorizing and recommending approval of loan applications. They work with commercial, industrial, and consumer loan applicants to gather the necessary documentation to make a loan decision. Loan Officers typically work for banks, credit unions, and other financial institutions. They may also work for mortgage companies, insurance companies, and government agencies. Loan Officers typically have a bachelor’s degree in business, finance, economics, or a related field. They must also be licensed by the Financial Industry Regulatory Authority (FINRA).

Underwriter vs. Loan Officer

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

Job Duties

Underwriters and loan officers perform many of the same tasks, but in different ways. Loan officers work with clients to find a suitable mortgage that they can afford and then process the necessary paperwork for them to complete their application. Underwriters evaluate these applications based on the client’s financial information and determine whether or not to approve the mortgage.

The duties of a loan officer are more focused on customer service. They spend most of their time helping clients complete forms and gather documentation. Underwriters, however, have more technical responsibilities because they need to understand the ins and outs of each mortgage before approving it. This includes understanding how lenders calculate mortgages and what risk factors could affect a particular client’s ability to repay their loan.

Job Requirements

Loan officers typically need at least a bachelor’s degree to enter the field, though some employers prefer candidates with a master’s degree. Common majors for loan officers include finance, business administration and economics. Many loan officers also pursue certifications through organizations like the Mortgage Bankers Association (MBA) or the National Association of Mortgage Bankers (NAMB). These certifications can help loan officers learn more about the industry and stand out to potential employers.

Underwriters also usually need at least a bachelor’s degree, although some employers may prefer candidates with a master’s degree as well. Common majors for underwriters include risk management, insurance and finance. Many underwriters also pursue professional certification through organizations like the American Institute for Chartered Property Casualty Underwriters (AICPCU) or the Insurance Institute of America (IIA). These certifications can help underwriters learn more about the industry and stand out to potential employers.

Work Environment

Underwriters and loan officers work in different environments. Underwriters typically work for mortgage companies, banks or other financial institutions that offer loans to consumers. They may spend their days in an office setting, reviewing applications from potential borrowers and evaluating the risk of lending money to them.

Loan officers usually work for mortgage companies, banks or other financial institutions that lend money to consumers. They often travel to meet with clients and help them complete the application process. Loan officers also spend time on the road visiting properties where they can assess the value of a property and determine whether it’s a good investment for the borrower.

Skills

Both underwriters and loan officers need to have excellent communication skills. They will often be working with customers directly, whether it is to explain the terms of a loan or to gather information about an applicant’s financial history.

Underwriters also need to have strong analytical skills. They need to be able to understand complex financial documents and use that information to make decisions about whether or not to approve a loan. Loan officers need to be able to understand these same documents but they also need to be able to explain them to customers in a way that is easy to understand.

Loan officers need to be very organized. They often work with multiple customers at one time and need to keep track of each customer’s individual file. Underwriters also need to be well-organized as they need to be able to keep track of the different elements of each loan application they are reviewing.

Salary

Underwriters and loan officers both work in the financial industry. Underwriters earn an average salary of $68,337 per year, while loan officers earn an average salary of $105,620 per year. Both of these salaries can vary depending on the type of financial institution you work for, your level of experience and your location.