How To Become a Mortgage Broker
By Indeed Editorial Team
Updated February 22, 2021 | Published November 12, 2020
Updated February 22, 2021
Published November 12, 2020
If you're interested in real estate, consider becoming a mortgage broker. Understanding what the role entails and its specific requirements can help you pursue this profession with greater ease. In this article, we define the role of a mortgage broker, list the main duties and average salary, provide you with the steps for becoming a mortgage broker and answer frequently asked questions regarding this profession.
What is a mortgage broker?
Also known as "mortgage loan officers," mortgage brokers connect homebuyers or homeowners with the best mortgage rate possible. They work on behalf of their clients to find the best interest rate and terms when it comes to a mortgage.
Mortgage brokers conduct thorough research on the latest interest rates and loan terms to offer their clients the best rates possible. Even if a broker develops a good relationship with a lending institution, they put their clients' best interests at the forefront. Mortgage brokers know lending rates, terms and institutions, credit reporting and what criteria constitute credit eligibility.
Related: Learn About Being a Mortgage Broker
What does a mortgage broker do?
While mortgage brokers help people secure home loans, they also have several other duties to help them find the best rates out there. Here are the common duties of a mortgage broker:
Establishing and maintaining professional relationships with lenders to recommend them to clients
Sharing different loan options with clients and help them make an informed decision regarding a new home loan
Finding clients loan programs with the best rates and terms and lowest closing cost.
Ensuring loans follow current regulations and laws
Gathering necessary documents, review a client's credit history and verify their financial statements
Educating your clients on the loan process, the documentation they need and an estimated timeline for their approval
Educating prospective homebuyers regarding the real estate and lending market and how both impact their chance of buying a home or refinancing
Comparing lender fees and terms to present borrowers with the best options
Applying for mortgage loans with lenders on behalf of their clients
Completing closing paperwork with a mortgage lender, the title company and the insurance broker
How much does a mortgage broker make?
Mortgage brokers make a national average salary of $91,316 per year. By comparison, senior mortgage brokers make a national average salary of $181,768 per year. The salary you make as a mortgage broker depends on your geographic location, your experience and expertise and your employer.
How to become a mortgage broker
To become a mortgage broker, you need to obtain a certain level of education and expertise. Having the right background sets you up for greater success when you search for employment in this profession. Follow these steps to become a mortgage broker:
1. Earn a high school diploma and an advanced degree
Earn at least a high school diploma or your GED to fulfill the educational requirements for a mortgage broker. While you don't necessarily need a formal degree, consider earning an associate or bachelor's degree in business administration, finance or accounting to help improve your employment opportunities and earning potential.
2. Take a pre-licensure class
As an aspiring mortgage broker, you need to get your license. Complete a pre-licensure program, which is a 20-hour class that covers topics like federal and state mortgage laws, broker ethics and financial regulations.
3. Pass the National Mortgage License System (NMLS) test
Once you complete the pre-licensure course, pass the NMLS exam. Known as the SAFE Mortgage Loan Originator Test, this exam test your knowledge of things like mortgage practices and state guidelines and regulations. To pass both the state and federal parts of the exam, you need at least a 75% score.
Make sure to renew your license each year by passing background and credit checks. Keep in mind that some states have additional requirements.
4. Register and establish your mortgage brokerage
After you pass your exam and complete the required coursework, register your mortgage brokerage business. The requirements for registering your mortgage brokerage business vary by state. Register your business with various details like your business name and location through your state's licensing authority.
As you register your brokerage, consider whether you want a physical location to provide your services or if you want an online brokerage business. Some states require you to have a physical location. If you opt for a physical location, consider the price of renting a physical space and its accessibility to your customers. If you decide to have an online business, consider creating a home office that allows you to work free from distractions.
5. Apply for your mortgage broker license and get your mortgage broker bond
After you pass the exam and register your business, apply for your mortgage broker license. Determine your state's requirements with the NMLS. Typically, you have to pass your exam, pay a licensing fee, get the right bond and submit your application to get your mortgage broker license.
You also need to get your mortgage broker bond to get your license. Having a mortgage broker bond protects your clients if you don't follow your state's rules of operating as a broker. It also helps you prove your validity to your potential customers.
The amount of a brokerage bond you'll need depends on your state. It's worth noting that you pay for a percentage of the total bond amount. How much you pay depends on various factors, including your financial history and your business details.
Once you determine the amount of bond you need, submit an application online. After you receive your bond certificate, sign it and send both the certificate and your license application to your state. After the state reviews and approves your application, you'll receive your license. Once you have your license, you can start working as a licensed mortgage broker.
6. Maintain your license
Keep up with mortgage lending developments in your city and state. Also, keep your license current by completing continuing education courses each year. When you renew your license each year, you need to submit proof of your continuing education. Not only does this keep your license current, but it also ensures you're offering your clients the most up-to-date loan information.
7. Continue your training
To become a successful mortgage broker, it's important to continue your training and education. Consider taking online or in-person courses to help improve your industry knowledge and help you better understand various state and federal regulations.
Also, make sure to build relationships with other mortgage brokers to help you stay current in your field and learn about the best industry practices.
Work environment for a mortgage broker
While some mortgage brokers work in an office space alongside other mortgage brokers and mortgage professionals, others work alone. Though each broker may have a different working environment, they share many of the same work conditions. For example, they meet with clients in an office space and communicate with lenders either in person or over the phone.
FAQs about becoming a mortgage broker
If you're interested in becoming a mortgage broker, consider these answers to frequently asked questions about the role:
What is the job outlook for a mortgage broker?
The U.S. Bureau of Labor Statistics reports an employment growth of 2% for real estate brokers and sales agents from 2019 to 2029.
Though it's a slower rate than the average employment growth for all other jobs, demand will increase for this profession due to the number of people needing brokers and sales agents when they look for a home.
How is a mortgage broker different from a real estate agent or loan officer?
While mortgage brokers and real estate agents have their similarities, they also have different duties. A mortgage broker helps buyers find the financing they need to buy a property, whereas real estate agents help buyers and sellers find or sell real estate property.
While a mortgage broker may also seem similar to a mortgage loan officer, these roles also function differently. Loan officers only offer mortgage options from the financial institution they work for, whereas mortgage brokers match their clients with different mortgage lenders.
What is a normal shift like for a mortgage broker?
A mortgage broker's shift depends on the needs of the clients. For example, a mortgage broker can choose to work from 6 a.m. to 10 a.m. and then continue working from 2 p.m. to 6 p.m. to better fit their clients' schedules. Mortgage brokers may also have irregular hours, working nights or weekends depending on their clients' needs.
What skills does a mortgage broker need?
Not only do mortgage brokers need to know the lending process, lending rates and lending institutions, but they also have to have a variety of hard and soft skills to help them perform their job successfully. Here are some skills a mortgage broker needs:
Attention to detail
Mortgage brokers need strong attention to detail skills when reviewing loan options, rates and terms. The better they read the fine print, the easier it is for them to present their clients with worthwhile loan opportunities.
As a mortgage broker, you need to have a friendly and outgoing personality to effectively communicate with your clients and financial institutions. Having good social skills makes it easier to get along with everyone you work with and makes your job more enjoyable.
Mortgage brokers need to have enough patience to endure the length of time it takes to find a lender that's willing to work with their prospective borrower. Also, they need to accommodate their client's various schedules and be willing to wait for them to make a decision when it comes to their loan options. They also need to have patience with the loan process—especially if they receive several rejections from lenders.
Mortgage brokers need to establish strong lender-borrower relationships. As a liaison between these two parties, it's important to ensure they're on good terms using your good negotiation skills throughout the loan finding and loan approval process.
As a mortgage broker, you need strong organizational skills to manage and keep track of all the various loan and finance documents. Staying organized makes it easier to manage your workload and provide your clients with a quality home buying and loan approval process.
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