An aspiring loan officer candidate should strive to develop these skills:
1. Interpersonal communications skills. These skills are a key to success during sales related phases of the job, application interviews, the counseling and advising of clients, and contending with high stress situations.
2. Analytical skills. The ability to focus on the details and apply critical thinking techniques is a critical part of the loan officer's job, especially when it comes time to shift gears from being understanding of the client's situation to being a pragmatist with respect to evaluating the paperwork. There is little room for uncertainty when it comes down to reviewing the numbers. All figures must be verified and documented and the reactions to underwriting requests need to be realistically anticipated.
3. Managerial skills. Because loan officers manage files, relationships, resources, time, people, and expectations, it is important that they have strong organizational skills, as well as, a good aptitude for spatial and financial planning.
Note: While loan officers may not necessarily need direct managerial experience, they do need to juggle many tasks at once, for instance, devising full scale strategic plans and creating a guiding process to achieve a controlled direction. They should have the ability to see the forest through the trees.
In a more economic or financial sense, an aspiring loan officer may want to look into taking these courses:
· General Economics.
· Money and Banking.
· Risk and Insurance.
· Introduction to Investments.
· Principles of Real Estate (ideal for aspiring mortgage lenders or brokers).
Note: Please bear in mind that this is only a partial list.
So that loan officers may originate sound loans, establish successful relationships with clients, and admirably service the bank or financial services company which they represent, it is critical that they be able to effectively employ a host of mathematical procedures.
Tasks for which a loan officer will use mathematic and numerical equations and formulas include the following:
· Accurately analyze clients' financial histories (data analysis).
· Swiftly interpret clients' credit ratings (credit worthiness).
· Competently assess economic factors affecting the loans' interest rates.
· Capably aide clients in establishing a budget and a schedule for repaying their loans.
· Knowledgeably identify and retrieve key financial information in charts and graphs and apply it to documents customized for clients
Admittedly, some of the mathematics problems faced by loan officers are more rudimentary than others. The following four mathematical areas are just some of the mathematical processes a competent loan officer will use regularly:
1. Money math.
2. Scheduling or budgeting and accounting math.
3. Measurement and calculation math.
4. Data analysis math.
Money Math. This most basic category encompasses such financial transactions as cash handling, bill preparation, and payment rendering.
Scheduling, Budgeting, and Accounting Math. These types of math involve a somewhat higher thought process and entails managing and viewing time and money as resources, allocating and monitoring their use, determining best value, reducing waste, and maximizing gain.
Examples in which loan officers rely upon Scheduling and Budgeting, and Accounting Math include, calculations of caps on loans that they can offer to clients, calculation of funds to be transferred into clients' accounts once loans are approved and processed, and calculations of amounts sent to additional financial institutions for the purpose of paying off multiple loans.
Further examples of Scheduling and Budgeting, and Accounting Math include monitoring the movement of funds going to and originating from clients' accounts to evaluate the appropriateness of the activities, assisting clients in drawing up budgets indicating proposed use of loaned funds.
Data Analysis. The analysis of numerical or mathematical data allows the loan officer to estimate the amount of time required to perform specific duties so that they may be more productive throughout the day. Using past experience as a guide, a loan officer may estimate the time they need to carve out an appointment by assessing the client's current phase in the application process and their level of sophistication with loan products.
Note: Among the four Numerical Calculation Application Concepts, there is some overlap. As is true of life, some activities fit under multiple categories rather than simply fitting into the one in which we have orderly grouped them.
Additional fundamental math skills used by loan officers include:
· Knowledge of whole numbers, integers, rational numbers, percentages, equivalent rational numbers. This encompasses the ability to read and write, count, round off, add or subtract, and multiply or divide whole numbers.
Such a mathematical background is frequently applied to the reading and writing of credit ratings, tracking prospecting calls, calculating terms, for example, the numbers of months and years corresponding to loan terms and amortization periods.
· Rational Numbers. Particularly where fractions are concerned, loan officers will need to be capable of reading and writing, adding and subtracting fractions, as well as, multiplying and dividing fractions by whole numbers and by other fractions.
Why fractions, you ask? Because interest rates are commonly expressed as fractions, thus, loan officers need to be able to divide yearly amounts by twelve in order to arrive at the amount for a client's monthly loan payment.
· Rational Numbers. Where decimals are concerned, loan officers must be highly proficient in their abilities to read and write, round off, add and subtract decimals, as well as to be able to multiply and divide numbers by decimals.
For the most part, loan officers regularly use decimals when referring to monetary figures, that is, dollars and cents. Hence, they use decimals when reading and writing account balances, totaling interest payments, and calculating loan payment amounts.
· Rational Numbers. Being familiar with the workings of percentages is quite important for loan officers for they need to be comfortable with reading and writing percent, calculating percent and determining the percentage that a portion is of a whole number.
Examples of loan officers' work with percentages include: calculating percentages of both approved and declined loans, calculating maximum loan amounts as percentages of market values, and taking into account a person's earnings as a component of their overall net worth and their ability to repay a loan.
· Equivalent Rational Numbers. Conversions, particularly those between fractions and decimals or percentages, are another area of significance for loan officers. The ability to convert between decimals and percentages shows up frequently so that loan officers can make such conversions as interest rates into fractions, and percentages into decimals.