Today’s financial environment makes the services of a mortgage broker almost mandatory. Since the average home’s value has increased over the years, more and more people are opting to get a mortgage to finance their purchase. The demand for a competent individual who possesses the necessary expertise, experience, and assets increases in tandem with that demand. Mortgage brokers are in high demand, but how much is the salary of a mortgage broker? Read on to get to know more about how to become a mortgage broker and how to get a license. We also explained the things that affect the salary of a commercial mortgage broker in this article. Why not dive in?
What Is a Mortgage Broker?
Mortgage brokers are authorized loan originators who search the mortgage markets on behalf of their clients. In contrast, mortgage loan officers who work for a single lender, like a bank or credit union, can only sell the mortgage products offered by that institution.
If a borrower has less-than-perfect credit or any other concern that could influence their loan application, they may choose to work with a mortgage broker instead of a loan officer to secure the best possible interest rate. Mortgage brokers can help borrowers with both new loan applications and existing mortgages.
What Does a Mortgage Broker Do?
While their primary function is to assist borrowers in securing mortgage loans, mortgage brokers also serve various other purposes. A mortgage broker’s main responsibilities include:
- Building and maintaining credible connections with lending institutions for the purpose of referring them to clients.
- Helping customers choose among available mortgage loans by providing them with information on available programs.
- Identifying loan packages that offer preferable rates, terms, and closing expenses to the client.
- Making sure all loans comply with current legislation
- Collecting information, checking references, and vetting financials are all part of the verification process.
- Informing customers of the steps they need to take to get a loan, what paperwork is required, and how long it will take to get their loan approved
- Educating potential homeowners on the real estate and loan industry and its effect on their ability to buy or refinance a home.
- Finding the most cost-effective financing choices by comparing rates and terms from many lenders
- Submitting Mortgage Loan Applications to Lenders on Clients’ Behalf
- Closing entails working with a mortgage lender, title firm, and insurance agent to complete paperwork.
How to Become a Mortgage Broker
Have you been thinking of what steps to take to become a mortgage broker? Worry not cos you’re in the right place! Here are some steps you need to take to become one:
#1. Earn a Diploma and a Postsecondary Degree
To enter the field as a mortgage broker, one must first complete secondary education. Mortgage brokers can typically find work without a college degree, but those that do tend to have degrees in business, finance, or accounting. This has the potential to increase the salary of a mortgage broker.
#2. Enroll in a Pre-licensing Program
In most places, a mortgage broker’s license is required before they may work. A pre-licensure program is what you do to get ready for the licensing exam. The typical length of this training is 20 hours, and it covers topics such as broker ethics, financial rules, and state and federal mortgage legislation. Taking this kind, of course, can help you study more efficiently and remember what you need to know for the exam.
#3. Prove Your Competence in the NMLS Exam
After finishing the prerequisite coursework, you must then take and pass the NMLS exam. This test, known as the SAFE Mortgage Loan Originator Exam, is designed to evaluate your expertise in areas including mortgage lending and government regulation. A score of 75% or higher is required to pass both the state and federal portions of the exam. After that, you just need to pass yearly background and credit checks to keep your license active.
Before filing for renewal, you should check your state’s standards to see whether there are any you haven’t already met.
#4. Find Work or Open a Brokerage
After you’ve finished the necessary training and passed the exam to become a mortgage broker, you can either work for an existing mortgage brokerage or strike out on your own. Mortgage brokerage registration requirements might vary by jurisdiction. Include the company’s name and address when you register with your state’s licensing agency.
When deciding whether to open a brick-and-mortar or virtual brokerage, it’s important to weigh the pros and downsides of each. Mortgage brokers in such states must maintain an office. Think about the cost of renting a place and how easily accessible it is to your target audience if you decide on a brick-and-mortar storefront. If you want to run a business from home, it’s important to set up an area where you won’t be interrupted as often.
#5. Get Your Mortgage Broker’s License and Bond
Apply for your mortgage broker license when you have passed the exam and registered your firm. Use the NMLS to find out what regulations your state has in place. In order to become a mortgage broker, most states require applicants to take and pass an exam, submit an application, and provide proof of financial responsibility through a bond. A bond may be required in order to obtain a mortgage broker license to practice as a mortgage broker. If your mortgage brokerage were to ever break any laws or regulations, your clients would be protected by the funds from a mortgage broker bond. It’s a great way to show potential clients that you’re legit.
The minimum required amount of a brokerage bond varies from state to state. A mortgage broker’s fee is a percentage of the total bond amount, therefore it varies based on the broker’s financial standing and the specifics of the bond transaction. Once you have settled on a bond amount, you can submit an application electronically.
Send your bond certificate, along with your mortgage broker license application, to the Department of Financial Services in your home state after you have received it and signed it. Your mortgage broker license will be issued once the state has reviewed and accepted your application.
#6. Don’t Let Your License Lapse
It is important for mortgage brokers to keep up with local and state mortgage lending regulations because licensure is required in most areas. By attending annual refresher classes, you can maintain your mortgage broker license in good standing. Each year you must provide evidence of your continuing education in order to renew your license. This is important for maintaining your mortgage broker license and providing the most up-to-date information to your clients about loans.
#7. Continue Your Training
It’s beneficial to keep learning and growing as an expert throughout your profession. You might want to take some classes, either online or in person, to learn more about your field and the numerous state and federal rules that affect it. Positive interactions with other mortgage brokers will help you understand common practices and stay abreast of field advancements while extending your training time.
Mortgage Broker Salary
According to Indeed.com, the average salary for a mortgage broker is $102,149 per year, while the average salary for a loan officer is $63,960 per year. In most cases, brokers get paid for the deals they help close, on a commission basis. Mortgage brokers typically earn between 1% and 2% of the loan amount, making each transaction worth thousands (if not tens of thousands). In addition to earning a decent mortgage broker salary, they enjoy a variety of other benefits from their chosen profession.
The salary of a mortgage broker is directly proportional to the amount of time and effort an individual is willing to invest into their career. The majority of your workday can be structured as you like. When you’re a broker, you don’t report to anyone else but yourself. You get to pick your own hours, the number of clients you take on, whether you want to work in an office or from home, and the type of work you conduct.
Longevity in a field is typically rewarded through the accumulation of expertise, a larger repertory, and better connections. Also, connecting with lenders and developing your people skills can increase your access to credit and your client base, respectively. Discovering, processing, and completing deals become simpler and more streamlined as time goes on, allowing you to make more on your own merit alone.
Commercial Mortgage Broker
You may find yourself in a position of leadership as your career progresses, or you may find that you have taken on additional duties. They might begin as a property manager, then advance to a project management position, and finally become a regional vice president.
Roles and Types of Commercial Mortgage Brokers
#1. Loan Officer
A career as a loan officer might put you in control of deciding whether or not borrowers receive financial assistance. The majority of your time will be spent reviewing loan applications and perhaps giving final approval or making a recommendation for approval.
Loan officers are often portrayed negatively in popular culture, but in reality, they are just performing their jobs. Most loan applicants aren’t qualified to receive them. Banks and other financial institutions are the most common employers of loan officers. And getting at least a bachelor’s degree is strongly suggested. However, you will gain the bulk of your knowledge from practical experience. In little time at all, you’ll be declining loans on a regular basis.
#2. Broker
A broker is a financial expert who oversees deals. Brokers act as intermediaries between financial institutions and their clients, facilitating transactions such as those involving insurance and real estate. Relationship-building and deal-making are at the heart of your job. Brokering deals is a form of sales that is typically seen as a stepping stone to management. Brokers can be found in a wide variety of fields, and they must master their respective businesses’ products and services thoroughly in order to give excellent customer support.
The majority of your time will be spent interacting with customers. Brokers maintain client connections through persistent communication, evaluation, and provision of services. However, the ultimate goal is to successfully close deals by bringing together the priorities of buyers and sellers.
#3. Mortgage Consultant
A mortgage consultant works with clients and businesses to determine which mortgage program will work best within their budget. He or she addresses all customer questions and concerns by drawing on in-depth familiarity with the company’s offerings. The loan officer helps the customer gather and evaluate the documentation necessary for loan approval and assists in the development of reliable mortgage data. In addition, he or she networks with financial institutions and real estate agents to market bank mortgages to customers. Finally, he or she bargains with lenders on rates and terms to facilitate the refinancing of current mortgages.
An individual only needs a high school graduation and a license to enter the field of mortgage consulting. A bachelor’s degree in economics or finance is required, though, if you wish to focus on commercial mortgages. Obtaining the necessary credentials is a benefit. You need to be able to think critically, negotiate well, and talk to others.
Commercial Mortgage Broker Salary
The average annual salary of a commercial mortgage broker in the United States is $86,523, with a range from $17,880 to $477,201. The median salary of a Commercial Mortgage Broker is $86,524 for almost 57%, with the top 86% getting $477,201 as a commercial mortgage broker salary.
How to Get a Mortgage Broker Salary
Being confident in one’s own abilities is not a prerequisite to getting a big salary as a mortgage broker. Focusing relentlessly on your work is essential if you want to rise in the professional ranks. Developing and maintaining ties with potential new clients is an ongoing game. Learn to communicate with others, to act promptly, and to show what you’re capable of. There is a lot of competition in this field as a whole, so distinguishing yourself from the crowd is all about making your name and reputation stand out. Being in the right place at the right moment can be the most effective strategy if your natural charisma isn’t enough to get you noticed.
What Affects the Salary of a Mortgage Broker
The salary of a mortgage broker can come with a commission based on the market share they achieve, the number of loans they close, and the average loan size. It is very important for you to know what affects the salary of a mortgage broker so as to help you in this field. The following are things that affect the salary of a mortgage broker salary:
#1. Loan Specifications
Mortgage brokers typically collect a commission of 2.25 percent for each deal closed. Loan terms may vary, but brokers cannot be paid more than 3 percent of the loan amount under federal law.
#2. The Terms of Their Contract with the Customer
Brokers’ fees are negotiated with their clients, who may be either borrowers or lenders. Commissions paid by lenders are typically higher than those paid by borrowers. Mortgage brokers receive compensation from lenders ranging from 0.75% to 2.75% of the loan amount. When the borrower foots the bill, mortgage brokers typically charge an origination fee of less than 3 percent of the loan total as commission.
#3. Housing Prices
Mortgage brokers often set their commission rates by the local housing market. To distinguish themselves from other mortgage brokers, those operating in a more competitive housing market may, for instance, offer reduced commission rates. A broker may demand a higher commission from a client in a less competitive market because there are fewer potential sellers to choose from.
What Makes a Mortgage Broker Distinct from a Real Estate Agent or a Loan Officer?
The roles of mortgage brokers and real estate agents are similar but distinct. In the same way, that real estate agents assist buyers and sellers in locating and transacting on the property, mortgage brokers assist purchasers in securing the finance they need to make a purchase. Mortgage brokers and loan officers may look identical, but they serve very different purposes. In contrast to mortgage brokers, loan officers can only refer customers to the mortgage offerings of their own institution for financing.
Can You Make a Lot of Money as a Mortgage Broker?
The average annual salary for a mortgage broker is $93,014, though this number varies widely depending on factors including the broker’s level of experience and the broker’s location. The sum they receive could be affected by their job status as well. Some mortgage brokers are employed by financial institutions like banks and brokerage firms, while others are self-employed.
Is Being a Mortgage Broker Stressful?
Having strong networking skills is crucial for expanding business. There is a high prevalence of burnout among mortgage brokers because of the ongoing pressure to attract new clients.
Why Working With a Mortgage Broker Is Better?
You may be able to save time, energy, and money by working with a mortgage broker. A mortgage broker may have greater connections with lending institutions. But remember that a broker’s interests aren’t always the same as yours. If you approach lenders directly, you might be able to negotiate a more favorable loan term.
Final Thoughts
Mortgage brokers function as middlemen between lenders and borrowers rather than actually providing the loans themselves. Mortgage brokers, in contrast to loan officers, are independent contractors who can work with a wider range of financial institutions. The salary for a mortgage broker and loan officer can vary widely depending on factors such as region and level of expertise.
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