How to Become a Mortgage Broker: Licensing and Practicing

how to become a mortgage brokerWith the housing market picking up steam, becoming a mortgage broker is a great career option. From the reasonable base salary to the lucrative commissions, good mortgage brokers can earn upwards of $60,000 per year in many locations.

Since the mortgage market is so competitive, mortgage brokers play an important role in helping borrowers find affordable credit. In this guide, we’ll look at how to become a mortgage broker, from professional certifications to networking skills.

Are you interested in becoming a mortgage broker? Learn more about what it takes to succeed in the mortgage brokerage industry by enrolling in our course, The U.S. Residential Mortgage Business.

What does a mortgage broker do?

Mortgage brokers play an important role in the lending industry. Since the mortgage industry is so competitive and borrowers have a large range of options, brokers give borrowers access to the best mortgage options from various lending institutions.

Until the 1970s, most homebuyers accessed credit directly from banks. However, as the lending industry grew more competitive, mortgage brokers stepped in to offer a more cost-effective, choice-focused option for homebuyers.

Today, there are over 400,000 mortgage brokers in the United States, and more than 68% of all residential loans originate through brokerages. Mortgage brokers benefit both lenders and borrowers in a variety of ways.

Borrowers benefit from being able to select the best loans from a massive range of lenders. The also benefit from having a skilled, knowledgeable partner on their side to help negotiate the best terms for their mortgage.

Lenders also benefit by outsourcing their customer acquisition and marketing to an external, commission-based industry. They also benefit from outsourcing the credit assessment process to brokerages, freeing up in-house risk management staff.

With the property market recovering and more consumers buying homes, mortgage brokers are operating in a lucrative market. Learn about how mortgage brokers find their customers by reading our blog post on mortgage marketing ideas.

How can you become a mortgage broker?

In order to become a mortgage broker, you need to possess a diverse range of skills, from sales and persuasion to the ability to carry out financial analysis. You also need to acquire a license, which can vary in type and requirements between states.

We’ll look at the skills required to succeed in the mortgage brokerage business later in this guide. For now, you’ll need to learn about the license you’ll need to acquire in order to become a mortgage broker in your location.

Mortgage broker licensing by state

The process of becoming a mortgage broker can vary dramatically from one state to another. Most of the time, the states with the most active real estate markets – such as California and New York – have the strictest broker licensing requirements.

In California, for example, there are two different paths to becoming a professional mortgage broker. These different paths each comply with different laws regarding lending and real estate: one through the Department of Real Estate, and the other through the Department of Corporations.

In other states, the licensing regarding mortgage brokers is very different. In some states, regulations determine whether brokers can deal in 1st and 2nd mortgages. In others, mortgage brokers need to have a physical office within the state itself.

It’s important to be aware of your state’s mortgage broker licensing laws before you start your career. You can learn more about the licensing requirements for mortgage brokers in all 50 states at Mortgage News Daily.

The importance of marketing skills

Mortgage brokers are responsible for more than just connecting borrowers with the best lender. Since the mortgage business is largely commission-based, brokers need to be good at attracting borrowers to their businesses in the first place.

The difference between success or failure in mortgage lending often comes down to marketing. Without the right customer acquisition system, even the most helpful of brokers will ultimately fail to generate any income.

Our course, Marketing Strategy, will help you formulate a strategy for bringing new customers into your mortgage brokerage business. Since borrowers are the core of any successful mortgage brokerage, a solid marketing plan is absolutely essential.

In addition to bringing potential borrowers into your business, you need to be able to sell them on the benefits of a mortgage. As a broker, your success is based on the amount of deals you can close, and closing deals requires strong sales skills.

Enroll in our Master Sales Training course to learn more about how to make your mortgage offerings more appealing to prospects, how to close deals, and the best strategies for achieving a high success rate in your mortgage broker career.

The importance of financial knowledge

Mortgage brokers do more than just find customers and broker loans. As part of the process of finding the best mortgage for a specific borrower, a broker needs to look at the borrower’s credit rating in order to find the most suitable, affordable loan.

During the housing bubble, borrowers often submitted falsified information in order to qualify for loans at better interest rates, or for larger amounts, than they could get legally. Because of this, risk management how plays a large role in mortgage lending.

Would you like to learn how to combat mortgage fraud? Our course, Mortgage Fraud Prevention & Detection, is aimed specifically at professionals in the lending industry interested in remaining compliant with state laws and free of fraudulent applicants.

Are you ready to become a mortgage broker?

Would you like to become a mortgage broker? From licensing laws to professional knowledge, the process of becoming a qualified, successful mortgage broker takes quite a lot of focus, effort, and dedicated study.

However, with the residential real estate market picking up steam once again, the time you’ll invest in becoming a mortgage broker could be a wise investment. In a real estate strong market, there’s often no better all-round occupation.

Start your career as a mortgage broker by studying your state’s licensing laws and requirements, as well as your local mortgage brokerages. Remember to learn more about the industry with our course, The U.S. Residential Mortgage Business.