Common Challenges Faced By New Mortgage Loan Originators (And How To Overcome Them)

Very little is quite as or even more professionally rewarding or challenging as becoming a Mortgage Loan Originator (MLO). While being an MLO offers excellent opportunities for growth, earning potential, and to help others, there are also numerous obstacles that new MLOs must face and overcome.

This article will provide practical strategies for overcoming the challenges faced by new mortgage loan originators.


Problem #1: It’s Cheaper to Rent

Mortgage loan officers need to convert leads into actual mortgage loans.  Many people still believe that it’s cheaper to rent. Buying a home is one of the most thrilling and rewarding experiences of a person’s life, yet many are hesitant to flip the switch for a host of reasons.

The down payment might be too high for some people, and for others, owning a home may actually be more expensive.  When considering the mortgage payment, monthly taxes, insurance, and, possibly, mortgage insurance, the total may exceed one’s monthly rent payment.  But, for many others, renting is actually more expensive, especially in the long run.

Solution: Inform Them of Their Options

The MLO must educate renters regarding the benefits of owning a home versus renting, and use that opportunity to explain why it’s better to own!

Breakdown the cost of a mortgage over a defined period, such as 30 years. Explain to them how a mortgage protects against inflation. Begin by letting them know about programs that don’t require a significant down payment. Renting also limits the aspects of your residence that can be customized while buying allows the homeowner to customize the home particular to their wants and style. Additionally, renters may find interest in realizing how rent doesn’t build equity and, unlike mortgage interest in most cases, rent is not typically tax deductible.  By the way, avoid offering definitive tax guidance unless you are certified to do so.  Always defer tax questions to a tax professional or the Internal Revenue Service (IRS).

Every potential customer presents with different needs and wants.  As such, it is essential for the MLO to customize his or her approach to each prospective borrower.

If in speaking with your customer, however, you recognize that it’s really not the best time for them to act, be sure to discuss this and explain why!  Doing so will foster trust and demonstrate that it’s their best interests that you have in mind.

If you need help developing effective sales strategies, ask us about our one-on-one mortgage coaching.

Problem #2: Borrower Burnout

One of an MLO’s most significant client challenges surrounds “borrower burnout.” People who have previously experienced the mortgage process already understand that they can save money when interest rates drop.

When working with experienced borrowers, the MLO is tasked with helping them decide whether repeating the process is worth it.  Do you know how to run a cost-benefit analysis for your prospective borrowers?  If not, it’s imperative that you learn how.  We can teach you.

Solution: Make it as Easy as Possible for Your Borrowers

Make your borrowers’ lives easier by assisting them with their refinancing. Mortgage professionals generally offer the same products with similar interest rates. What distinguishes them as different, as better, is the level of their service.

Communicating with your customers in their language is critical.  And I simply don’t mean the language that they speak.  The mortgage process can be an overwhelming experience because it’s often challenging for a borrower to understand industry jargon and unfamiliar terminology.  Avoid doing so at all cost.  Bolstering one’s own ego by trying to impress as knowledgeable backfires if the listener doesn’t understand what the speaker is talking about.  Impress with your actions and not just your words.

Prior to taking an application, properly prepare your borrowers by providing them with a thorough and detailed itemization of all documentation that you expect them to have with them when applying.  Encouraging them to amass all of their supporting documentation up front may initially strike them as cumbersome, but, when considering how much time they’ll ultimately save and delays they’ll sidestep by completing the application using accurate data, the upfront work will be well worth the trouble.  Would a tax professional prepare a client’s tax returns based on estimates?  Never!  So why should an MLO be expected to do the same?  The goal is to make the mortgage process as seamless as possible while keeping your applicants up-to-date every step of the way.  By following this guidance, you are certain to set yourself apart from your competition, in a very good way.

Problem # 3: They Have Poor Credit

Another significant challenge for the MLO is when their prospects present with bad credit. A bad credit score can trigger higher interest rates or, even worse, prevent them from getting approved for the loan they desire.

Solution: Help Them Improve Their Credit Score

You are their trusted advisor.  Even if financing at the present time is not an option, there’s no reason why they won’t be able to in the future. Prepare yourself for success by helping them improve their credit score. Instruct them on what they can do to better their situation.  Provide them with a “recipe to follow” that, by following it, will eventually render them creditworthy.  You can also develop referral relationships with credit repair services specializing in credit restoration.  Regardless, always remember that there is no such thing as an unqualified borrower.  Just someone who is currently unqualified.

Be certain to stay in touch with your future customers as they’re implementing your suggestions.  Checking in with them every two-to three-months should do.  By using a mortgage-optimized Customer Relationship Management (CRM) system, you can launch drip marketing campaigns to help you maintain top-of-the-mind awareness as your future customers improve their approvability. Do this and you will likely be the first mortgage professional who they consider when they’re finally ready to buy their new home.  We’d love to share with you several exciting ways to maintain top-of-the-mind awareness with your customers.  Just ask!

NMLS Training Credit Score Image Blog


Problem # 4: Losing leads due to manually intensive applications

Many MLOs lose potential customers because of how complicated they make the process. When homebuyers face a complex and confusing system with repeated requests for information, they may easily become frustrated and might even walk away.

It’s akin to hitting a dead-end or getting stuck in a repetitive loop; nobody likes that feeling. MLOs must make things smooth and easy for customers to keep them actively engaged, interested, and happy.  But never cut corners to do so!  Cutting corners may make things easier at first, but doing so will always make things far more difficult than they would otherwise have to be down the road.


Problem #5: They Try to Predict the Market

Borrowers trying to predict the market constitute another common problem MLOs face. When the COVID pandemic appeared, interest rates were at record lows, making it an ideal time to refinance and purchase a home.

Since COVID and the subsequent inflation, the Federal Reserve has been forced to regularly increase interest rates in attempt to curb spending, reduce consumer demand, and lower inflation.  Although refinancing is no longer practical (at least for the time being), many people are still trying to buy homes and are in need of financing to do so. A mortgage loan originator whose production is directly tied to interest rates is not properly focused.  Educate consumers.  Help them to understand the economy’s cyclical nature.  Interest rates will drop.  They always do.  As long as the borrower can qualify and afford the payment, nothing else should matter.  And, with that being said, remember that today’s high-interest-rate borrower will be tomorrow’s refinance customer.

Solution: Show Them the Facts Through Credible Sources

It’s impossible to predict what the market will do in the future.  Rates go up and rates go down.  Ideally, the savvy investor tries to “buy low and sell high!” Interest rates and housing prices constantly fluctuate.  Predicting what will happen next is next to impossible.  One’s home should be viewed as a domicile and a long-term, not a fluid, investment.

Instead of focusing on interest rates, find a payment with which your customer is comfortable.  Focus on the benefits to homeownership.  Explain how, by waiting, they might lose the home to which their hearts are drawn. With properties receiving offers, often within moments of their listing, the best way to turn a dream into reality is to be prepared to act and act as soon as an opportunity presents itself.


Problem #6: They Already Refinanced This Year

In most cases, home financers have already taken advantage of the low-interest-rate environment from which we’ve recently emerged.  Pursuing refinance business, therefore, is not a viable goal.  At least not at this time.

Solution: Nurture the Relationship

Mortgage needs evolve over time. There is no benefit realized by desperately pressuring people to act when doing so is not in their best interests.  Healthy customer relationships are not forged on what solely benefits the sales person. Prosperous and lasting customer relationships, the kind that spawn referrals, are forged in what’s mutually-rewarding.  And a mortgage professional should never lose sight of his or her fiduciary responsibility to always act in his or her customers’ best interests.

It’s always advantageous to help one’s customers plan for the future. Experienced borrowers are valuable leads because of their future likelihood to explore refinancing to address future needs.  And regularly nurturing the relationship in non-productive times will ensure that it’s you who they call when the time is right and they’re ready act.

Plant seeds now that will eventually bloom into fruitful relationships. Build these relationship strong so that, when the time finally comes, they’ll return to you for their mortgage needs.



Mortgage loan originators must be able to persevere, adapt, and continuously learn in order to become the outstanding professionals who they’re able to be.

Aspiring mortgage loan originators can pave the way for a rewarding and fulfilling career in the mortgage industry by understanding and overcoming the common challenges that new MLOs face.


If you are ready to begin your new and exciting career as an MLO, get started on the right footing today with!

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