Loan Officer Interview Questions
Loan Officers are typically associated with banks but can work for other financial institutions such as credit unions, investment banks, and mortgage companies. Loan officers are responsible for authorizing loans to individuals and businesses based on credit, risk, and prior loan history. Loan officers act as a go-between for financial institutions and those seeking financial loans.
A loan officer’s responsibilities will include:
- Meeting with potential clients.
- Evaluating loan-seeker’s credit and the potential risk of issuing a loan.
- Preparing loan proposals based on the evaluation of a client and their financial history.
- Monitoring and adjusting loans to minimize risk for the financial institution.
- Rejecting potentially risky loans as well as making sure the client understands the reasons why.
A loan officer’s skills will include:
- Experience in finance and banking.
- Flexibility to work with the issuance of multiple types of loans such as business, personal, and mortgage loans.
- Good communication skills to work with clients and financial institutions effectively, making sure that every party involved is informed reliably.
- Good IT skills and proficiency with finance-related software.
- Good record-keeping skills to ensure current loans are monitored correctly and accurately.
A bachelor’s degree in finance is required for entry-level positions, and several years of prior experience is expected for larger institutions. Loan officers are required to be well-versed in local, state, and federal loan regulations regarding the type of loans they will be evaluating and approving.
Salaries for Loan Officers range between $41K to $126K, with the median being $90K.
Factors impacting the salary you receive as a Loan Officer include:
- Degrees (Associates, Bachelors, Masters)
- Previous Productions, Recognition and Awards
- Reporting Structure (Seniority of the Manager you report to, the size and type of the loans processed, and number of direct reports)
- Level of performance - Exceeding Expectations
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Loan Officer Interview Questions
Question: How experienced are you with reviewing and filing loans?
Explanation: This is a general or opening question. Interviewers will ask you this type of question to start the interview, get you talking, and learn more about your background. They utilized your answer to formulate additional questions throughout the interview.
Example: “In my previous jobs, I worked with hundreds if not thousands of clients, reviewing their loans and mortgage applications, processing them, and filing them with the appropriate government entity. My work resulted in a great deal of revenue for the organizations I worked for as well as my clients getting the financial assistance they needed.”
Question: Have you worked with automated loan processing tools, such as Loan Prospector (LP) and Desktop Underwriter (DU)?
Explanation: This is a technical question in which the interviewer is trying to discern your familiarity with common loan practicing software and tools. As a loan officer, you should have experience using these applications and be able to talk about them in detail.
Example: “I have a great deal of experience with both Loan Prospector and Desktop Underwriter. In addition, I use other tools, such as Microsoft Excel and Salesforce. Together, this suite of applications allows me to do my job more efficiently and to process a greater number of loans in the same amount of time.”
Question: Can you describe your typical day working as a loan officer?
Explanation: An interviewer will ask this question to discover how you spend your time and how familiar you are with loan processing. They expect you to address topics such as client acquisition, the loan application, underwriting review, and final approval or rejection.
Example: “While no two days in the life of a loan officer are alike, there are similarities. I typically start by reviewing the current loans I am processing to see if any updates have occurred. I then spend a couple of hours acquiring new clients to fill my pipeline. The remainder of the day is spent processing existing loans, working with underwriters and other bank officials, and interacting with the clients to move the loans towards completion. I also counsel clients whose loans have been rejected as to their options and other sources of funding.”
Question: When reviewing a loan, what areas are you most concerned with, and do you focus on?
Explanation: This is a technical question. Interviewers will ask you technical questions to gain an understanding of how well you know about the job and what processes you use to complete your work. Technical questions are best answered with brief explanations. The interviewer will ask additional questions if they need more information.
Example: “When reviewing a loan application, the area I am most concerned about involves the client's income sources as well as their current debt load. I tend to focus on the client’s ability to service the loan more than their past credit history. This normally results in more loans being approved if appropriate, and fewer defaults.”
Question: Can you explain what this layering is and how to use it?
Explanation: This is another technical question in which the interviewer is asking you to define a term used in this profession. Again this type of question should be answered directly and succinctly. The interviewer will ask a follow-up question if they need additional information.
Example: ” Risk layering involves a client having multiple risks across their credit history, capacity to pay, or collateral against the loan. Taken together, the layered risks can compound the client's ability to repay the loan and service their debt.”
Question: Have you ever recommended a different loan vehicle or finance package to a client who initially applied for a mortgage to purchase a new home?
Explanation: This is an operational question. Interviewers ask operational questions to learn more about how you do your job. Operational questions are best answered by briefly describing the process you use to accomplish the task the interviewer is questioning you about.
Example: “On several occasions when a client was not able to qualify for the mortgage they were applying for, I recommended alternate solutions to help them purchase their property. These included other types of loans such as FHA or VA, as well as other sources of funding, including relatives, the seller, or real estate investors.”
Question: Can you explain how you go about assessing the risk for a loan?
Explanation: This is another operational question. The interviewer is seeking to learn what criteria you use to assess loans and recommend approval or denial.
Example: “The formula I use to assess risk is to take the maximum amount of loss which would occur and multiply it by the probability that this will happen. The loss is based on the amount of the loan minus the collateral from the client. The probability is determined by a qualitative assessment of the client’s application, including their credit score, current debt load, the stability of their income, and other factors.”
Question: Can you tell me about a time when you went above and beyond to help a client obtain a loan?
Explanation: This is a behavioral question. Interviewers will ask you behavioral questions to determine how you react to a specific situation. Behavioral questions are best answered using the STAR framework. State the Situation, describe the Task you need to accomplish, talk about the Actions you took, and then provide information about the Results you obtained.
Example: “Recently, a young family applied for a loan which was beyond their means. My job was to find a loan they could afford or move them in a new direction. I worked with several loan brokers who had access to funding, which was appropriate for this situation. We were able to get the family into their home using a loan which they could afford and service.”
Question: What steps do you take to ensure that the client has a positive experience with the loan application process?
Explanation: This is another operational question related to the customer experience. While ensuring that all loans are appropriate and have minimal risk, the other function of a loan officer is to provide a customer with a positive experience, which will lead to repeat or new business.
Example: “When working with clients, I take the time to explain the loan application and approval process thoroughly. I answer any questions they may have and direct them to other resources, which will help them in obtaining the loan they are applying for. I also make myself available around the clock in case they have questions or need some reassurance.”
Question: Can you tell me about a time when you worked with a client who’s risk assessment was high, but to whom you were able to provide a loan anyway?
Explanation: This is another behavioral question. Make sure you format your answer using the STAR framework.
Example: “I once worked with the client whose credit score was low, was self-employed and had several other outstanding debts. Despite this, I felt that they would be able to service the debt and would not default. I helped them to clean up some items on their credit score and structured the loan with a cash payout to pay off their other debt, thereby consolidating everything into a single payment. They were approved for the loan and have continued to make the payments for over two years.”
Additional Loan Officer Interview Questions
When issuing a loan, what resources do you use to make sure it complies with financial regulations?
How do you deal with a client whose loan has been rejected?
How do you go about ensuring the confidentiality of a client’s financial information?
How do you sell a client on a loan proposal they may not feel completely sure about?
How do you deal with an angry customer?
How do you begin the process of evaluating a proposal?
What aspects of your personality make you suitable to work with clients?
How would you describe your sales style?
What was the most difficult sale for a proposal you managed to close?
How do you explain the loan process to a new client?
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