How to Become a Mortgage Broker: A Step-by-Step Guide

Have you ever thought about becoming a mortgage broker? It can be a rewarding career helping homebuyers secure financing to purchase their dream home. In this comprehensive guide we’ll walk through the step-by-step process of how to become a licensed mortgage broker.

What is a Mortgage Broker?

First let’s start with the basics – what exactly does a mortgage broker do?

A mortgage broker is an independent contractor who serves as an intermediary between borrowers and lenders. Their primary role is to analyze a borrower’s financial situation and then shop multiple lenders to find the best mortgage rates and loan options.

Unlike a loan officer who works directly for a bank, a mortgage broker is not employed by any one lending institution. This allows them to present multiple loan offers and ensure their clients get the best deal.

Key responsibilities of a mortgage broker include:

• Meeting with clients to understand their financial goals and credit history
• Collecting documentation like bank statements, tax returns, etc.
• Assessing clients’ finances to determine the optimal mortgage type and amount
• Researching current mortgage rates, fees, and loan programs from various lenders
• Presenting loan offers from multiple lenders for clients to compare
• Guiding clients through the application and approval process
• Acting as an advocate on behalf of borrowers

In exchange for providing this service, mortgage brokers earn a commission from the lender usually between 0.5% to 1% of the loan amount.

Now that you understand what mortgage brokers do, let’s look at how to actually become one.

Step 1: Earn a High School Diploma or GED

The first requirement is a high school diploma or equivalent GED certification. While some employers may not strictly require this, it’s highly recommended to have at least a high school level education.

Coursework in math, finance, economics, and business will be helpful in preparing you for a career as a mortgage broker. Having strong communication and interpersonal skills is also important when working with clients.

Step 2: Complete Pre-Licensing Education

The next step is to complete 20 hours of pre-licensing education. This involves taking mortgage broker courses covering topics like:

• Ethics and conduct
• Federal mortgage lending laws
• Loan product knowledge
• Origination process
• Fraud prevention

Every state regulates the pre-licensing education requirements so be sure to verify the approved courses in your state. Many programs are available online for convenience.

Step 3: Pass the SAFE Exam

After finishing your pre-licensing courses, you’ll need to pass the SAFE (Secure and Fair Enforcement for Mortgage Licensing Act) national mortgage loan originator exam.

The test consists of 125 multiple choice questions and you need to score at least 75% to pass. There are also state-specific questions based on your region’s laws.

You can register and schedule the exam through the Nationwide Multistate Licensing System (NMLS) website. The exam fee is around $110.

Thoroughly review the NMLS content outline and study materials before taking the test. Some states may limit the number of times you can take the exam if you fail.

Step 4: Apply for Your Mortgage Broker License

Once you successfully pass the SAFE exam, submit a license application along with any required fees to your state’s regulatory agency. The average processing time is 7-10 business days.

You’ll also need to complete a background check and provide fingerprints. Any criminal offenses related to fraud or dishonesty may impact your application.

If approved, you’ll be granted a state license to originate mortgages under the sponsorship of a licensed lending institution. This allows you to start working as an official mortgage broker.

Step 5: Find a Job as a Mortgage Broker

Now comes the fun part – starting your job search! Here are some tips for finding your first mortgage broker position:

• Look for entry-level roles at established brokerages that provide training for new brokers. Large firms like Quicken Loans are a good option.

• Search mortgage broker job boards like MortgageDaily, NationalMortgageProfessional.com, and Mortgage Educators & Compliance.

• Check listings on general job sites like Indeed, ZipRecruiter, and LinkedIn. Search for terms like “mortgage broker” or “loan officer”.

• Network and make connections by joining your state’s mortgage broker association and attending local real estate investing meetups.

• Consider starting as a loan processor to gain experience before transitioning into a broker role.

• Apply to big banks that hire both mortgage brokers and loan officers.

With determination and perseverance, you can get your foot in the door at a company that’s willing to give new brokers a chance to prove themselves.

Step 6: Get Trained and Gain Experience

Once hired, you’ll receive extensive on-the-job training by senior mortgage brokers at your company. You’ll shadow brokers at first and then slowly start handling your own clients under their supervision.

It takes 1-2 years of experience to gain competence and work independently. During this time you’ll build connections with underwriters and become an expert on lending guidelines.

Continue taking CE courses annually to stay updated on the latest mortgage products, regulations, and interest rates. Never stop learning!

Step 7: Consider Specializing

After a few years of experience, you may want to specialize in a certain mortgage field like:

• VA loans – for military members and veterans
• FHA loans – for low-to-moderate income borrowers
• Jumbo loans – for high-value luxury properties
• Reverse mortgages – for seniors tapping home equity

Specializing allows you to provide tailored guidance based on your expertise in a niche area of mortgages.

Step 8: Explore Starting Your Own Brokerage

Many experienced mortgage brokers aspire to open their own mortgage brokerage firm. This allows you to operate independently and build a team of brokers underneath you.

You’ll take on more responsibilities like marketing, compliance, training staff, securing warehouse lines of credit, and managing partnerships with lenders.

It’s a major step but can be very rewarding to run your own successful brokerage business.

Key Skills for Mortgage Brokers

To thrive as a mortgage broker, these traits and abilities are extremely helpful:

• Communication skills – explain complex financial terms to clients clearly
• Listening skills – identify customer needs and goals
• Sales skills – build trust and establish relationships
• Attention to detail – document, process and verify information accurately
• Time management skills – handle high volume workload efficiently
• Math and analytical skills – analyze financial documents and loan scenarios
• Industry expertise – stay updated on the latest mortgage products and regulations

Benefits of Being a Mortgage Broker

There are many advantages to becoming a mortgage broker:

• Flexible schedules – brokers can often set their own hours
• Unlimited earning potential – income is based on your motivation and sales ability
• Work variety – every client’s needs are different
• Helping people – assist borrowers in realizing their homeownership dreams
• Entrepreneurial opportunities – open your own brokerage or loan website
• Transferable skills – knowledge applies to many financial services roles

If you’re a people person who enjoys sales and helping others, it can be a fulfilling way to earn a good living in the real estate industry.

Is Being a Mortgage Broker Right for You?

While it takes dedication and effort, the process of how to become a mortgage broker is very achievable if you have the drive. It’s a promising career path for someone who loves working with numbers and takes satisfaction in finding the perfect mortgage solution for each unique homebuyer.

With the housing market still going strong, talented brokers are in high demand. If you have an analytical mind, passion for real estate, and desire to help others, consider pursuing this potentially lucrative and meaningful career.