Whether times are good or bad, starting your own business as a mortgage broker is a steady industry in any economy. The consistent income is not there for a loan officer working under someone else - but for the broker, it's a piece of commission from every sale. However, to become a mortgage broker, most states have stringent requirements for the road to get there.
Mortgage brokers must obtain a broker's license, and most states require that the broker applicant have a certain number of years under his or her belt working for others. In addition, the applicant must have earned a set minimum amount of income as a loan officer.
Passing the broker exam is your ticket to opening your own office, employing only yourself or an entire team of loan officers. For the entrepreneur who wishes to open an office, you will need to set aside your marketing expenses, office rental fees and equipment costs to buffer your profit zone by at least three months. Brokers are not paid until the end of escrow, which is not unusual to extend for 90 days. When choosing an office location, the best leasing deals are inside of a commercial building, but this location can be detrimental in your first year as your business name will not be visible to the street. Branding and recognition is everything, and you may be best served by renting an office in a strip mall where you are seen by the auto and foot traffic. It will cost you a bit more in rent, but the payoff is worth it.
Your commission split agreement with your agents should be generous to attract talent, but must retain sufficient profit margin to keep things going. A new trend has proved itself popular with broker and agent alike, in giving your loan officers 100 percent commission and charge them a desk and closing fee. This keeps your income at a predictable and steady level, but works best only in large offices with plenty of loan officers.
Marketing is an essential tool to pull you from the pack of loan brokers and give you an edge over the competition. Find a niche market and fill it, whether it be working with a community of foreign language clients, HUD recipients or home buyers with challenged credit. If you do what everybody else does, you'll get lost in the crowd. Be different and get the word out to the people. One excellent source is cable television advertising, which has become affordable even with the giant networks. For a modest fee you may purchase an ad package to include shooting, scripting and local air time in your target market location.
A successful loan broker career will bring you much honor, profit and time flexibility, but building the clientele may take a few years. People who purchase big ticket items naturally gravitate towards a familiar name. But, with careful planning and a steady commitment, you can rise above the competition and earn the trust of your community. Remember to keep yourself competitive by taking continuing education courses in business online; it's crucial to keep your skills sharp.