The U.S. housing market is roaring back and many people who lost their homes several years ago are now past the point where their foreclosure would prevent them from buying a home. If you want to capitalize on this soon to be tsunami of new home buyers, you should be in the position to help them find and buy homes. In this article, we’re going to lay down the first steps to starting a mortgage brokerage business so that you can earn a living helping others find homes, without having to become a lender yourself.
Set Up a Business
Mortgage brokerages aren’t taken seriously if they don’t have a physical address. A mortgage broker who lists a home address will be mistaken for a scam artist trying to steal people’s identities or interfere with the legal process of selling or flipping properties in order to steal the real estate itself.
You need a physical office address, and in many jurisdictions, an incorporated business. You should have your business incorporated as an LLC, or another form that limits your personal liability for any business mistakes or lawsuits against you. You don’t want to risk losing your own home because someone blames you for losing theirs.
The Mortgage Broker License
You cannot become a mortgage broker if you don’t acquire a mortgage license. The requirements vary between jurisdictions, so check your local government website to learn what the requirements are to get the license. You may need to pay a license processing fee, get a business license, arrange for the right type and level of business insurance or more. When you’re ready to get mortgage licensing, mymortgagelicense.com/ is an excellent resource.
Develop Your Loan Portfolio
You need to develop the loan portfolio you would offer to prospective clients. Contact wholesale lenders and go through their process of becoming an intermediate between them and your clients. Determine which ones have fees, terms and products you can work with. Each lender has a unique loan approval process; learn the full process for each lender you choose to work with. Don’t forget to work with credit unions and non-traditional lenders so that you have a loan for anyone in any set of circumstances.
Connect with Other Service Providers
You will need to work with real estate appraisers to appraise each potential property, a title and/or escrow settlement service and credit report service. You should consider networking with credit counseling services, real estate agents, and lawyers, so that you have the names of good people on file when you need one. If you’re going to offer mortgages to those who want to flip houses, identify hard money lenders and short term lenders your clients could work with.
Plan How to Market Your Business
Plan how you’ll market your business. Listing your business in online directories is a minimum, and creating a quality website is just more than the bare minimum. The best way to find clients is to work with real estate agents whose clients want to secure a mortgage. Real estate investment clubs are a potential source of customers. Consider how you could market your services, such as putting ads in magazines and mailers sent to apartment dwellers. Offer financial incentives to those who refer clients to you, though you need to stay on the right side of the law.
Starting a mortgage brokerage business isn’t easy, but if you keep the above steps in mind, you should find you get everything set up properly from the start.