Your Path to Success
Are you naturally gifted in working with both numbers and people? Do you possess a passion for real estate or finance? If you answered yes to either of these questions, becoming a mortgage broker might be a career path that interests you. So, what does a mortgage broker do?
Mortgage brokers are intermediaries who match borrowers, such as individuals and businesses, with mortgage loans, seeking the best lenders for the borrower’s unique financial situation. A mortgage broker can help a borrower save time, effort and money throughout a loan. Mortgage brokers earn commissions, or origination fees, based on a loan’s size. Although borrowers do not have to work with a mortgage broker to secure a loan, many lenders only work through mortgage brokers.
6 Steps to Becoming a Mortgage Broker
Let’s take a look at how to become a mortgage broker:
Step 1: Earn a High School Diploma or GED
The first mortgage broker requirement is a high school diploma or GED. Most employers do not require their mortgage brokers to have college degrees, but a bachelor’s degree in an area like finance, accounting or business may improve a mortgage broker’s salary and career opportunities.
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Step 2: Complete Pre-Licensure Training
The Safe and Fair Enforcement for Mortgage Licensing Act (SAFE Act) requires all mortgage brokers to be state-licensed or federally registered. Federal registration is only applicable to depository institutions like credit unions, subsidiaries owned by depository institutions and institutions regulated by the Farm Credit Administration. All other mortgage brokers or mortgage loan originators will need state licenses.
Pre-licensure training is administered by the National Mortgage Licensure System and consists of a 20-hour course, which covers state and federal laws on topics like mortgages, broker ethics and loan origination.
Step 3: Pass the National Mortgage License System (NMLS) exam
After completing the mortgage broker course, the next step is to take and pass the NMLS exam, also called the SAFE MLO test. According to the Nationwide Multistate Licensing System, the exam consists of 120 multiple-choice questions broken into five content areas:
- Federal Mortgage-Related Laws.
- Uniform State Content.
- General Mortgage Knowledge.
- Mortgage Loan Origination Activities.
- Ethics.
The test costs $110, candidates have 190 minutes to complete it, and a score of 75% or higher is required for state licensure.
Step 4: Apply for Your State’s License and Get a Surety Bond
To get your mortgage broker license, you’ll need to submit the following information through the NMLS platform:
- Proof of pre-licensing course completion.
- NMLS, also known as SAFE MLO, test results.
- Fingerprints for a criminal background check.
- Your financial statements.
- Authorization to run a credit report.
You’ll also have to obtain a surety bond. Surety bonds provide additional security for your clients and can range from $50,000 to $200,000, depending on your state. Mortgage brokers typically pay a premium of around 1-3% of their bond amount, dependent on credit score.
Step 5: Secure a Job or Establish Your Own Brokerage
Now that you know how to get a mortgage broker license, let’s explore the next steps. You have the option to either find a job or create your own brokerage. Most new mortgage brokers choose to start their careers at established brokerages. These brokerages have existing relationships in place and can help ensure you have plenty of borrowers and lenders to work with.
On the other hand, you may get better deals on loans if you deal directly with lenders through your own independent brokerage. If you choose this option, you’ll need to register your brokerage with the U.S. Small Business Administration. This process involves choosing a name, location and structure for your business, registering it with local, state and federal agencies, obtaining state and federal tax IDs, and applying for business licenses and permits.
Step 6: Maintain Your License and Continue Training
The process of becoming a mortgage broker continues even after you’ve obtained a license and a job or started a brokerage. NMLS licenses must be renewed each year, which requires paying a renewal fee and completing a specified number of annual training hours, as required by your specific state.
In addition to these mandatory training hours, the best mortgage brokers also complete optional coursework and obtain certifications to grow their knowledge of the real estate and mortgage industries. The National Association of Mortgage Brokers (NAMB) offers three tiers of mortgage broker certification. These can enhance your credibility with clients and boost your career prospects.
Unlocking Opportunities
Becoming a mortgage broker is a challenging but rewarding career path. According to Indeed, the national average salary for mortgage brokers in the United States is $165,953. Mortgage brokers with exceptional organization, negotiation and interpersonal skills can far exceed this average. Now you know how to become a mortgage broker, and you’ve taken the first step to determine if this is the right career for you. Good luck!