How do you become a mortgage broker? In this guide, we’ll outline the basic steps to achieve this.

A mortgage broker acts as an intermediary in brokering mortgage loans between individuals and businesses (such as lending institutions). While this line of work fascinates many, only a few have an understanding of what it takes to become one.

If you’re interested, this article will show you all the steps you need to take to realize your desire.

What You Stand To Earn

As a mortgage broker, you are acting as a middle man. Your job will consist of helping homeowners and buyers as well as helping clients source mortgage loans from banks. There are potentials for growth especially as it relates to how much you earn.

On average, the income earned by a mortgage broker is $55,000 per year. However, this can increase to six-figure income or more depending on how committed and driven you are. Mortgage brokers earn through commissions charged on services rendered.

It involves a lot of work though. You’ll need to research a lot on the property market.

Steps On Becoming a Mortgage Broker

This section will dwell predominantly on the steps you must take to become a mortgage broker. This is a process you can’t avoid. You only need to read carefully and follow through by taking the necessary action and you’ll be well on your way to achieving your desire.

  • Get Your Pre-License Training

This is also known as the pre-licensure mortgage broker class. It is a 20-hour state-specific training that seeks to enhance consumer protection. Known as the SAFE ACT, it seeks sets out or establishes the minimum standards for licensing and registration of mortgage officers.

The courses you take in your pre-license training will depend on what state you live in. A state like Arkansas, for instance, has its own set of courses. Before taking these, you are required to submit an application through an MU4 filing, complete a Criminal Background Check (CBD), and demonstrate financial responsibility by authorizing a credit report via the NMLS (that is, the Nationwide Multi-State Licensing System and Registry).

Other things you must do include fulfilling state and federal education requirements, taking and passing both Arkansas State Component and National Component tests.

What else? It’s mandatory to be covered by a recovery fund or surety bond. Present your GED or high school diploma, provide information to access independent credit report and submit information regarding civil criminal or administrative proceedings.

Your designated 20-hour pre-license training includes courses such as Federal Law (3 hours), and Ethics (3 hours).

Others include Non-Traditional Mortgage Lending Training (2 hours) and 12 hours of electives.

  • Pass The National Mortgage License System (NMLS) Test

You need to pass the national mortgage licensing system test to qualify for the next stage. This test seeks to assess several aspects of the course taken. The major areas being the level of understanding you have about state-specific mortgage regulations as well as the broader picture of as regards to mortgage practices.

The NMLS Test is divided into two major sections consisting of both federal and state. It won’t be enough to pass one section and not making the grade in the other. Both sections will need to be passed with at least a 75% score in each.

There are online resources that help out with adequate preparations for these tests.

Having passed the National Mortgage License System test, you are now ready to move to the next stage which is a registration and establishing your mortgage brokerage firm.

  • Register And Establish A Mortgage Brokerage

Registration requirements for a mortgage brokerage business will differ from state to state.

In other words, there’s no uniform registration requirement for every state. However, the basic things needed for registering such a business will include obtaining an Employer Identification Number, choosing a suitable business structure in addition to the choice of a business name.

A business name search will need to be carried out to avoid duplication. You’ll need to change a name if it has been taken by another business. As regards choosing an appropriate business structure, it will be best to seek legal advice.

All of the above information will then be used in registering your business. You’ll also need to write a business plan.

i. Counting The Cost

Cost, as used here, involves all expenses incurred from registering for training, sitting for tests, licensing and setting up your business. The cost of renting an office space as well as furnishing it can add up significantly too. You must be well prepared for such expenses from the onset.

Not being adequately prepared for this might end up in frustrations. This is something you don’t want to encounter when your hopes are up.

ii. Brick And Mortar Or Online?

This is a decision you’ll need to make. While some states allow the operation of online mortgage brokerage firms, others don’t. In the case of a brick and mortar mortgage brokerage firm, you’ll need to seek out an ideal location. There’s a need to be in the very heart or epicenter of brokerage activities in your city.

There are things to consider when choosing a site for your business. You’ll need to consider the number of hours a day you will be available. The price of renting an office space also counts. How easy is it for clients to access your location? How big is the mortgage industry in your preferred location? These are vital to choosing the right spot for your business.

  • Build Professional Relationships

There are lots of actors or participants within the mortgage brokerage industry. You must enter into mutually beneficial relationships. This keeps you abreast of happenings within the industry. Also, you stand to benefit from client referrals, industry experience and more. A lot of these relationships will last throughout your career.

These are the basic steps to take to become a mortgage broker. Although this can be a rewarding venture, the path to achieving this goal isn’t smooth. You are bound to encounter several challenges in the process. However, your drive and determination will keep you afloat when things get tough. It is worth the stress too!