Take away food :
- Home Ownership Remains On The Wish Lists Of Many In The United States
- Each state has slightly different requirements, but they always involve obtaining a mortgage broker‘s license and a surety.
- There are five steps to getting your license.
Despite the ups and downs of the global financial markets, owning a home remains on the wish lists of many in the United States. There will always be a need for the services of mortgage brokers.
Because mortgage brokers play an important role in the homeownership process, their profession is highly regulated. Each state has slightly different requirements, but they always involve obtaining a mortgage broker‘s license and a surety.
If you are currently starting your journey to become a mortgage broker, you may not be sure where to start. So read on to get a better idea with the following five steps.
1. Start with the right education
Sorry, Pink Floyd, but you need education, and that is also true of becoming a mortgage broker. While no college degree is required, mortgage brokers need at least a high school diploma in addition to 20 hours of training at a licensed institution.
Also, although it is not mandatory, you cannot be good at a job like this if you do not train in areas such as economics, financial analysis, accounting, law and law. government.
Many online courses now exist on these topics at sites such as Coursera, but if you prefer to be among the people, you can also take evening classes at a community college near you.
2. Preparation for the exam
In addition to the 20 hour training requirement, you will also need to take an exam to show what you have learned. The exam is administered by the National Mortgage Licensure System (NMLS), which is the system in which licenses are maintained, although the NMLS is not per se a licensing authority.
The exam, called the SAFE Mortgage Loan Originator Test, has questions specific to each state, but most of it contains questions about national regulations.
To better prepare for the exam, be sure to read the free resources provided on the NMLS website.
3. Understand bonding requirements
Most states require that every valid mortgage broker’s license be accompanied by a mortgage broker surety.
A mortgage broker surety bond is one type of surety bond. Essentially, it’s a kind of protection for the future owner – your client.
If you were found to be using fraudulent business practices, a customer could sue you for the bond amount required by your state.
For example, in Pennsylvania the amount is set at $ 100,000, but in Alabama it is only a quarter of that amount – $ 25,000.
Of course, you don’t have to pay all of these amounts to become a mortgage broker. Mortgage broker obligations are paid in annual premiums, the same way insurance works, except that the insured person is not you in this case.
4. Calculate your costs
Before starting a business, you would want to calculate your start-up costs in advance. Although the exact number will depend on various factors, it is possible to get a rough estimate.
The exam fee is a fixed amount for all brokers regardless of state: the national component costs $ 110 and the state component is $ 69.
When it comes to mortgage broker obligations, it is a bit more complicated as the prices depend on many factors, although you can always get an estimate just by using your credit score. If it’s good and you don’t have any other credit problems, the premium is around 1-3% of the total amount.
If you have bad credit, which means a FICO score below 650, the premiums can go up to 15%. However, do not hesitate to speak to your surety officer about the possibility of reducing your costs, as it is possible even if your credit score is far from perfect.
Finally, each state may have a nominal processing fee, which is generally not refundable.
5. Maintain your mortgage broker license and surety
Of course, the journey does not end with obtaining a license. Once you do, you need to keep that license, which means renewing it every year.
Depending on your state, you will need to complete a number of hours (approximately 20) of continuing education and also renew your mortgage broker surety. Keep in mind that if you want to operate in more than one state, you must start a new license application there.
These are the most important steps in becoming a mortgage broker. Go ahead and find your state’s regulator and start your application.
If you are having difficulty with any part of the process, please feel free to leave a question or comment in the section below.
As for experienced mortgage brokers, what advice would you give to anyone just starting out? Please leave your thoughts in the comments section below.
Email Todd Bryant.