How to Get a Mortgage Broker Company LicenseJan 26, 2023
If you are experiencing the desire to check out the Mortgage Broker channel, you are not alone. Nearly 1,000 loan officers are switching over to the wholesale channel every month in 2022.
Opening your own mortgage broker business is a great way to become your own boss and make great money. However, in order to do so, you will need to obtain a mortgage broker company license. This article will outline the steps you need to take in order to get your license and start working as a mortgage broker.
What is a mortgage broker company license, and what are the requirements to obtain one?
A mortgage broker company license is a license that is required in order to work as a mortgage broker in each state. The requirements to obtain a mortgage broker company license vary from state to state, but all individuals looking to open their own mortgage broker business will need to complete the following licensing steps, if they want to own their own mortgage brokerage:
The main requirement for obtaining a mortgage broker company license is having or obtaining an individual NMLS license. This usually includes passing an exam and completing a certain number of hours of coursework. Additionally, submitting for a mortgage broker company license number involves paperwork and a variety of information, determined by the state the business is filing in.
Note: For any loan officer who already has an individual license, a NMLS number and has taken and passed the SAFE exam, you will not need to do anything else for your individual license.
Put simply, a mortgage broker business is the process of a loan officer going from being simply a loan officer that works for someone else, to becoming a business owner who must go through the steps of becoming a licensed mortgage broker business that can sponsor themselves and other licensed mortgage professionals.
How do you go about obtaining a mortgage broker company license?
In order to obtain a mortgage broker company license, you will need to complete the following steps:
- Have or obtain an individual NMLS license number if you do not already have one.
- Submit for a mortgage broker company license number by creating a new company NMLS account.
- Download your state's mortgage broker checklist and begin gathering all the items on the list. This involves paperwork and a variety of information that is determined by the state you will be getting licensed in. You can download a copy of your state’s license by going to the following website, clicking on your state, and then searching for the section labeled “Mortgage Broker License” and then on the right
How much does it cost to get a mortgage broker company license?
The cost of getting a mortgage broker company license varies from state to state. In Pennsylvania, the cost ranges from $500-$1,500. However, this is just a general estimate and the actual cost may be higher or lower depending on your specific situation.
The cost of getting a mortgage broker company license in Colorado is $500 and in Arizona, $1,000. This fee covers the costs of processing your application and includes the required background check.
Contact your state's licensing authority for more information on the specific requirements and costs associated with obtaining a mortgage broker company license in your state.
What are some of the items on the state checklist?
- Completed NMLS license application (MU1)
- Certificate of authority from state
- Articles of incorporation or organization
- Corporate bylaws
- Surety bond in the amount listed on your state’s checklist
- Letter stating that you will be responsible for all debts and liabilities of the company
- List of principles and officers
- Credit reports for all Owners
Before you obtain a mortgage broker company license, it is important to be aware of the following:
- The requirements to obtain a mortgage broker company license vary from state to state, so make sure you are familiar with the specific requirements of the state in which you plan to do business.
- The cost of getting a mortgage broker company license also varies from state to state, so be sure to look up the costs for your state.
- You will also need to submit for a mortgage broker company license number by creating a new company NMLS account.
- To complete the licensing process, you will need to gather all the items on your state's mortgage broker checklist and submit them to your state's licensing authority.
- You can handle all of the steps above yourself or you can hire a licensing company to help you with getting approved for your company license.
What are the qualifications for opening a mortgage brokerage?
In order to open a mortgage brokerage, you will need to meet specific qualifications. These qualifications typically include having a particular net worth, a specific amount of experience, and a good credit score.
The net worth requirement varies from state to state. Some states have a 0 net worth requirement, whereas other states require $50,000-$100,000. This net worth must be unencumbered, meaning it cannot be used as collateral for any existing mortgages or loans.
Your credit score will also be considered when determining whether you are qualified to open a mortgage brokerage. A score of 650 or higher is typically needed in order to be approved.
If you meet these qualifications, you can apply for a mortgage broker company license by submitting the required documents and fees to your state's licensing authority.
Do all company owners have to have an Individual NMLS license?
If you are opening a mortgage brokerage with more than one person, only one person is required to have an individual NMLS license. In some states none of the owners are required to have the license and an employee can hold the required individual license. The person whose license is used is called the “Qualifying Individual.”
Here are the requirements of who must carry an individual license at a mortgage brokerage:
- Mortgage Broker Owners- only required if a single owner who is the Qualifying Individual
- Mortgage Broker Qualifying Individual- Required to have Individual License
- Mortgage Broker Loan Officers- All are required to have a NMLS Individual License
- Mortgage Broker Processors- Not required to have an individual license
Is It Hard to Become a Mortgage Broker?
Becoming a Mortgage Broker Company owner is not difficult, but it can be confusing and a bit overwhelming if you have never gone through the steps before. The most difficult part of the process is figuring out where to get the items on the checklist and submitting them correctly through your new company NMLS account.
Obtaining a mortgage broker company license can be a complicated process, but by following the steps outlined in this blog post and contacting your state's licensing authority, you should be able to get the information you need to move forward. Make sure to familiarize yourself with the specific requirements of your state and the costs associated with obtaining a license. The qualifications needed to open a brokerage vary from state to state, but most require a net worth and good credit score.