Loan Underwriting License Information: How-To Guide

Loan underwriting is the approving of a loan to one who wishes to take out a mortgage. Loan underwriters carefully review a borrower's provided documentation, such as credit history, employment and income, and then decide whether or not the borrower qualifies for the loan.

In order to become a licensed loan underwriter, it is necessary to learn about relevant financial concepts, determine state eligibility requirements and pass a state certification exam.

Obtaining a License in Loan Underwriting

Loan underwriters, or loan officers, are required to be licensed due to the U.S. Department of Housing and Urban Development's recent legislation, the SAFE Act. Licensing requirements still vary by state, but often include at least 20 hours of coursework, a written exam and a background check with no felony convictions. Loan underwriters are often required to become re-certified every few years.

The following advice can be helpful for aspiring loan underwriters.

Understand the Concepts

Begin learning about the concepts and topics included on a loan officer exam. These topics include:

  • Real estate math
  • Loan laws
  • Principal
  • Interest
  • Real estate appraisal
  • Closing costs
  • Code of ethics
  • Legal aspects of real estate
  • Community property law

Find Laws Specific to Your State

Each state's government website explains the requirements for licensing in all professions. Individuals can learn on a state government website about licensing requirements for loan underwriters, which are often available through a downloadable PDF file. These requirements may involve certain application, education, experience and examination criteria.

Meet the Licensing Requirements

After completing the coursework required by the state, students should go to the Nationwide Mortgage Licensing System's website and learn how to take their state's licensing test. For instance, many states require that the test taker understand the state's laws, standards of conduct and practices regarding loans and mortgages.

Take the Test

Loan underwriting licensing tests have a national component to them as well as a state component. Both of these components must be passed in order to become licensed. In 2017, the national component of the test cost $110, while the state component was $69.

Individuals receive the results of their loan underwriting licensing test within 72 hours of taking the examination. An e-mail is sent to an individual, telling them their results are ready to be viewed on the Nationwide Mortgage Licensing System website.

Loan Underwriter Career Information

The main job of loan underwriters is to accept or reject applications for loans. To determine whether or not a loan should be offered to a particular applicant, loan underwriters prepare reports that contain financial information about the applicant, such as their financial statements, previous credit reports and the collateral that they possess to back the loan. Loan underwriters typically find work at banks and other financial institutions. In March 2017, PayScale reported that the median annual wage for loan underwriters working specifically with mortgages was $61,879. For underwriters of consumer loans, the median annual salary was $48,236.

In order to become a loan underwriter, it is necessary to pass a state certification exam. From there, loan underwriters can help financial institutions make critical lending decisions.

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