What is a Mortgage Broker
A mortgage broker is a bridge between a borrower and the lender. The broker will compare banks and lenders to find a home loan with a competitive interest rate. Furthermore, a mortgage broker is not a lender, however, facilitates the transaction between the lender and borrower. Often, they will have a network of lenders they reach out to during a transaction. From there, the lenders will give the broker their estimated rate based on the borrower’s financials.
A mortgage broker is a licensed home loan expert that navigates the complicated waters of buying a home. If you decide to work with a mortgage broker, you will likely be met with great service. While mortgage brokers help find the best rates, you will have to pay their fee in closing costs. The broker fee is between 1% – 2% of your total loan cost . Therefore, you should account for this bulk payment before you decide to choose a broker.
How To Become a Mortgage Broker
How to become a mortgage broker starts with your personal qualities. Brokers are natural self-starters – most own their own firm. This means that you have to be a dedicated sales professional that can generate leads, develop a pipeline, and nurture long-term relationships. Beyond entrepreneur skills, becoming a mortgage broker requires dedication. This means that you are willing to persevere through good and bad days. The first year of your mortgage broker career will be a constant grind, competing against multi-national companies. Therefore, you need to discover what sets you apart from other lenders and truly believe it. This will allow you to push through hard days and find long-term success.
Once you have pushed through your first year and found success, you will need to become a team builder. It is impossible to truly succeed without a great team. When becoming a mortgage broker, it is vital that you find transaction coordinators, marketing assistants, loan processors, lenders, and other brokers. If you build a team correctly, you will likely see higher sales and greater purpose in your work.
State and National Licensing
Once you decide that becoming a mortgage broker is your career of choice, you will need to start the licensing process. First, you will need to check the state licensing requirements for the state you wish to operate in. In addition to your state license, you will need to get your national mortgage license. The national mortgage license does not allow you to operate across the county. It is more of an education on federal laws and regulations that is mandatory for all mortgage brokers. Before you take your state and national licensing tests, you will need to look at your pre-licensing requirements. While it is different in every state, you will more than likely need to take pre-approved courses. Once the pre-requisites are complete, you can take your test and become a licensed mortgage broker.
Mortgage Broker vs. Loan Officer
Often, when deciding to become a mortgage broker, you will also consider a career as a loan officer. While mortgage brokers and loan officers’ day-to-day tasks look similar, these two jobs are very different. A loan officer is the main service representative for a mortgage lender or bank. Similar to brokers, loan officers assist prospective buyers with the mortgage process; obtaining documents, and handing off their files to underwriting. One of the first major differences between brokers and loan officers is the actual mortgage they provide. For example, a loan officer for Quicken Loans will offer their borrower a Quicken-backed mortgage every time. Inversely, mortgage brokers will offer home loan options to their borrowers. The options that mortgage brokers provide can be a revolving door of lenders and banks. However, Loan Officers are obligated to only offer a mortgage from the company that signs their paychecks.
Furthermore, another significant difference between mortgage brokers and loan officers is employers. Often, mortgage brokers work for themselves and qualify as self-employed. This means that they take on a level of risk that employees do not take on. Contrary, loan officers are direct employees of the bank or lender they work for. The organizational structure between loan officers and brokers is complete opposites. In this vein, because loan officers work on behalf of their lender, they often get resources from the corporate office. For example, loan officers are often plugged into corporate-approved training, technology, and underwriting. Most mortgage brokerages do not have the same resources as multi-million dollar lenders. However, their local service model and lack of corporate red-tape allow them to move quickly and effectively in their community.
Fundamentally, mortgage brokers are experienced loan professionals that have been in the industry for years. Often, mortgage brokers start their careers as loan officers for large banks. By starting a career as a loan officer, you will learn the industry quickly, develop your database, and make great money without a ton of risk. After you have put a few years in as a loan officer and feel like the ceiling is too short for your goals, you can pivot to a career as an independent mortgage broker with full confidence.
Salary & Compensation
When learning how to become a mortgage broker, you will want to know what is the salary of a broker. According to Indeed.com, mortgage brokers make an average of $92,262 per year. While their average salary is around 92k, mortgage brokers have less of an income ceiling due to the self-employed nature of the business. Furthermore, geographic location is a major income factor for brokers. Some of the highest-grossing markets are San Deigo, Charlotte, Phoneix, and Jacksonville. If you operate in cities that have booming housing markets, you will likely see 6-figure salaries year in and year out.
Becoming a mortgage broker takes a lot of commitment to your business. Seeing lasting success comes down to education, experience, and overall drive. The market can seem saturated at times, therefore, it is vital to focus on the local lender value proposition. This niche has supported the mortgage broker community for years. All in all, if you can commit your time to learn the industry and have the drive to grow your business, you will see lasting success as a mortgage broker.
If you are interested in more marketing topics, dig into the following posts:
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Henry has spent the bulk of his career working for mortgage companies and marketing agencies. He uses his experience in the martech industry to guide his strategies and insights in the mortgage and real estate world. He firmly believes that marketing success in every industry boils down to a technology-centered strategy.