When talking about mortgages, the difference between a loan officer vs. underwriter can be blurry; both professionals help customers secure residential or commercial mortgage loans. However, underwriters work in a variety of other financial services besides mortgages, like the insurance industry and investment banking. Similarly, loan officers can specialize in different types of loans, such as personal or automotive loans.
So, how can you tell the difference between these two careers? What are their various responsibilities — and how do those translate into preferred skillsets, education requirements, and even salary outcomes?
Here’s everything you need to know about the differences between a loan officer vs. underwriter, plus how to know which career path is best for you.
What Are Underwriters?
An underwriter is responsible for assessing risk in a variety of financial scenarios. Specifically, they determine whether or not a company (their employer) would be willing to take on the risk of engaging in a financial agreement with a client. These agreements include insurance policies, loans, and mortgages.
Underwriters specialize in one area of finance, such as insurance, mortgages, or securities (like stocks and bonds).
For example, “insurance underwriters are responsible for analyzing, assessing, and pricing risk for a number of different [insurance] product lines,” says Omar Dogbey, senior underwriter at Sompo International.
However, even within the insurance industry, an underwriter can specialize in types of insurance policies, like car, pet, health, or life insurance.
Underwriters in loans and mortgages decide if a customer is eligible for a mortgage. The bank or financial institution is taking a risk whenever it gives out a loan or mortgage: The customer might not pay that loan back. So, only approving customers with a high likelihood of repayment is a core responsibility of loan and mortgage underwriters. Mortgage and loan underwriters are sometimes confused with loan officers because both professionals deal with loans closely.
Underwriters combine their analytical skills with methodical decision-making as they evaluate financial risks. They tend to work in structured, detail-oriented environments where accuracy is of the utmost importance. Successful underwriters are systematic thinkers who enjoy diving deep into data and can make decisions under pressure.
>>MORE: Learn more about underwriting.
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What Are Loan Officers?
While an underwriter may determine if a customer is eligible for a loan, a loan officer works directly with clients to find loans to apply for.
“Loan officers spend their time meeting with clients, evaluating their financial situations, and helping them choose the best mortgage products,” says David A. Krebs, mortgage broker at DAK Mortgage.
Brokers and loan officers help clients find loans, but brokers usually work independently from a financial institution, while loan officers are often employed directly by a bank or lender.
>>MORE: Learn more about what a broker is.
Think of a loan officer as the first step toward securing a mortgage, business loan, or personal loan. They review clients’ financial information to match them with the best loan options. For instance, they might walk a client through the benefits and drawbacks of a 30-year versus 15-year mortgage. Loan officers partially share the duty of assessing eligibility with underwriters. However, a loan officer only assists clients in finding and applying for loans they are likely to qualify for, while an underwriter has final authority in approval.
Similarly to underwriters, “loan officers can specialize in different areas like residential or commercial mortgages, government loans, or refinancing,” says Krebs.
Loan officers combine their financial expertise with strong interpersonal skills as they manage multiple client relationships. They tend to work in fast-paced, relationship-driven environments. Successful loan officers are adaptable and outgoing, detail-oriented enough to spot potential issues, and resilient enough to handle the ups and downs of a sales-oriented position.
Underwriter vs. Loan Officer Salaries
Loan officer and underwriter salaries depend heavily on the area of specialization, location, company, and amount of experience.
The U.S. Bureau of Labor Statistics (BLS) reports that loan officers make an average annual salary of $84,490. However, user submitted data on Glassdoor suggests that loan officers can make significantly more, with salary range estimates around $136,000 to $251,000 per year. Loan officers typically make a commission on the loans they sell, meaning they get a payment equal to a certain percentage of the loan. So, loan officers can make more per client when house prices rise and mortgages increase.
On the other hand, insurance underwriters make an average of $85,610 per year, according to BLS data. But across all specializations and experience levels, Glassdoor estimates underwriters’ salary ranges are around $71,000 to $126,000 annually. Unlike loan officers, underwriters typically don’t get commission. Rather, they receive a salary wage. So, even with price fluctuations in insurance, loans, or securities, an underwriter’s salary won’t change much. Ultimately, specialization and experience impact an underwriter’s pay the most.
| Experience Level | Loan Officer | Underwriter |
|---|---|---|
| Early Career (<1 Year Experience) | $90,000 to $167,000 | $62,000 to $104,000 |
| Average for All Experience Levels | $136,000 to $251,000 | $71,000 to $126,000 |
| Experienced (>15 Years Experience) | $129,000 to $240,000 | $91,000 to $160,000 |
Loan Officer vs. Underwriter: Which One Is Right for You? Quiz
Now that you know more about what loan officers and underwriters do, which one best matches your skills, career goals, personality type, and more? Take the quiz! You’ll need to sign up to get your results, but it’s absolutely free.
How to Become a Loan Officer or an Underwriter
Education
You may not need a degree to become a loan officer, but it can certainly help. Studying finance, economics, business, or a related field can prepare you for this career by giving you a stronger foundation in evaluating finances and analytical thinking. If your goal is to focus on mortgage loans, studying real estate can also be beneficial.
For underwriters, “there is such an emphasis on soft skills that the industry is open to all majors,” says Dogbey.
However, you do need at least a bachelor’s degree, and majoring in a math-focused field, like statistics, finance, or mathematics, can help you handle some of the main tasks of the job, such as making quick calculations and processing financial data.
Ultimately, “internships are the best way to get your foot in the door,” says Dogbey.
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Certifications and Licenses
Although underwriters don’t need a certification or license, having one can make you more marketable to future employers. A certificate also helps solidify your specialization and can show your expertise in an area. For example, insurance underwriters focusing on property and casualty insurance can gain a Chartered Property Casualty Underwriter (CPCU) certification.
Loan officers may need to be licensed. Mortgage loan officers, for instance, usually need a Mortgage Loan Originator (MLO) license. Other certifications are available, too. Krebs notes that the Certified Mortgage Banker (CMB) designation can be a valuable option for mortgage specialists.
Skills
“Being able to communicate and build relationships is key” in underwriting careers, says Dogbey.
This is also true for loan officers, though! Both loan officers and underwriters need to be able to work effectively with clients and colleagues, so soft skills, like communication, are crucial.
Other skills necessary for both careers include:
- Attention to detail
- Analytical skills
- Understanding financial statements and information
- Problem-solving skills
- Research skills
- Familiarity with relevant programs, like Excel
Krebs recommends current and potential loan officers “stay up-to-date on industry news, regulations, and trends, and develop a strong understanding of the lending process.”
On the other hand, underwriters can benefit from exploring more technical and hard skills, like coding languages, that can help streamline processes and improve their ability to assess risk quickly and efficiently.
>>MORE: See our picks for the best online coding bootcamps in 2024.
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Bottom Line: What’s the Difference?
When it comes to mortgages, both underwriters and loan officers work closely with clients to help them get the loans they need. However, both of these careers go well beyond just mortgages. Underwriters can work in investment banking, insurance companies, and other financial institutions. On the other hand, loan officers can specialize in certain types of loans, like commercial or personal loans.
| Loan Officer | Underwriter | |
|---|---|---|
| Primary Function | Guide customers through the process of finding and applying to loans, like mortgages, personal loans, or business loans | Analyze financial contracts, like loan applications or insurance policies, to determine eligibility |
| Education and Background | A degree isn’t always necessary, though studying finance, economics, or real estate can help build critical skills | A degree in finance, economics, or STEM area (particularly actuarial science, programming, or statistics) is preferred |
| Average Salary Range | $136,000 to $251,000 | $71,000 to $126,000 |
| Necessary Skills | Analytical thinking Communication Relationship management Attention to detail | Attention to detail Analytical thinking Risk management Programming |
| Work environment | Fast-paced and relationship-oriented | Focused and detail-oriented |
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