To become an independent mortgage broker, you need to follow a series of steps to ensure you have the right qualifications, licenses, and strategies to succeed in the competitive real estate financing industry. Here’s a detailed guide to help you achieve your goal.
Part 1: Doing Research and Gaining Experience
Step 1: Research the Role of a Mortgage Broker
- Understand the different types of mortgage brokers: residential (working with individual home buyers) and commercial (working with companies).
- Know the responsibilities, which include advising clients on loan options, processing loan applications, obtaining credit reports, and understanding real estate financing regulations.
Step 2: Confirm Your Educational Qualifications
- Ensure you have a high school diploma or GED. Though a bachelor’s degree in business, finance, or economics is preferred, it’s not mandatory.
- Be aware that most states require a mortgage broker license to operate legally.
Step 3: Gain Relevant Experience
- Consider starting out as a real estate agent or loan officer to build a foundation in the industry. Experience in these roles can help you understand financial documents, market trends, and client interactions.
Part 2: Getting a Mortgage Broker License
Step 1: Check State Licensing Requirements
- Research the specific mortgage licensing laws in your state. Regulations vary, so it’s important to know the requirements for your area.
- Contact the National Association of Mortgage Brokers (NAMB) for detailed licensing information.
Step 2: Complete Required Mortgage Licensing Courses
- Enroll in courses through the National Mortgage Licensing System (NMLS). Typically, these courses cover Federal Law, Ethics, Non-traditional Mortgage Lending, and elective topics.
- Expect to pay around $1500 for the licensing fee and submit a Surety Bond of $10,000.
Step 3: Obtain Your License
- After completing the coursework, you will receive documentation proving you are a licensed mortgage broker. This is essential for establishing your credibility with clients.
Step 4: Consider Additional Certifications
- Get certifications from the National Association of Mortgage Brokers, such as Certified Residential Mortgage Specialist or Certified Mortgage Consultant. These can enhance your knowledge and appeal to clients.
Part 3: Establishing Your Broker Service
Step 1: Gain Hands-On Experience
- Work at a larger mortgage firm or in the mortgage department of a housing firm or bank for three to five years to build your expertise.
- Alternatively, join an online mortgage service like LendingTree.com to gain experience in a virtual environment.
Step 2: Decide on Your Business Model
- Determine whether you will operate from a physical office or run an online-based service from home. Check your state’s regulations regarding physical office requirements.
Step 3: Budget for Start-Up Costs
- Plan your start-up budget, including expenses for office supplies, computer equipment, and transportation. Start-up costs can range from $2,000 to $10,000.
Step 4: Find Your First Client
- Leverage your existing relationships with lenders and use networking strategies to find your initial clients. Providing excellent service will lead to referrals and repeat business.
Step 5: Build Relationships with Key Industry Players
- Cultivate strong relationships with lending institutions and real estate agents. These connections are vital for obtaining client referrals and building a sustainable business.
Step 6: Enhance Your Skills and Services
- Stay updated on industry regulations and trends. Consider additional training in related skills, such as underwriting, to offer more comprehensive services to your clients.
- Focus on providing exceptional customer service and personalized attention to distinguish yourself from other brokers.
Community Q&A
Question: I was a mortgage broker back in the 1990s. What do I have to do to get my broker’s license again?
- Answer: Contact your state’s financial regulation department for specific requirements. You may need to take updated coursework and pass current licensing exams.
Question: Can I buy an established mortgage broker business and operate straight away?
- Answer: Yes, but it’s not always advisable. Success in this industry is heavily based on personal relationships and referrals. You will also need to meet state licensing requirements, which typically involve coursework, exams, and background checks.
By following these steps and maintaining a commitment to continuous learning and excellent service, you can establish a successful career as an independent mortgage broker.