Steps to Mortgage Licensing Success

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Owning a home is part of the American dream and despite the ups and downs in the real estate market, there will always be a need for licensed mortgage brokers.

While mortgage brokers aren’t required to close a home deal, they can provide advantages to homeowners — as the real estate professionals at HomeLight, explain: A mortgage broker is like a matchmaker for home buyers and lenders, offering choices among rates and loan types from lending companies. Also, real estate agents who obtain a Mortgage Broker license and Mortgage Loan Originator license are better equipped to help their clients.

Although every state has its own requirements, no matter where you live you’ll need to obtain, at a minimum, an individual Mortgage Loan Originator (or MLO) license, and a Mortgage Broker or other company-level license.  If you are just getting started in your journey to becoming a mortgage broker, you can have a clearer idea of what’s ahead of you with these tips from the real estate experts at Inman.

Go to school


To take the SAFE Mortgage Loan Originator test, which is administered by the National Mortgage Licensure System (NMLS), you’ll need to complete 20 hours of Pre-Licensing Education from an approved institution. You can research course providers and state requirements in the NMLS resource center to find the best option for you. A bachelor’s degree is not required, only a high school diploma, but you may find that earning a degree in business, finance, or a related field may provide a stronger background to be a successful mortgage broker.

Get real world experience


Even while you are on the path to becoming a mortgage broker, there are ways to get work experience to prepare you for your future career, say the professionals at LoanOfficerLicense.net. Before studying for your exam, you might consider working in a bank where you can assist loan officers or managers with administrative work to learn about the process.

Prepare for the exam


Your exam will have questions that are unique to your state, but the largest part of it will test you on your understanding of national regulations. To best prepare for the exam, you can also turn to the NMLS resource center for study materials.

Understand state bonding requirements


Most states require that each valid mortgage broker license be accompanied by a surety bond, which protects home buyers from fraudulent business practices. A surety bond is retained by the state like an insurance bond against errors or omissions made by the broker or individual MLO. For example, if a borrower alleges damages and complains to the state (doesn’t require a lawsuit), they may be able to make a claim against your surety bond. You should be able to purchase a surety bond from a surety provider for a percentage of the payout value (most states require a minimum of a $25,000 bond, but others could go as high as $100,000 or more, depending on the nature or size of your business). This bond is held by the state to guard against any error or damages incurred by a consumer due to the actions of the licensee.

Maintain your license and bond


Getting your license isn’t a one-time requirement, once you pass the test and get your license you’ll need to maintain it. Requirements will vary by state and you can research these in advance on the NMLS (Nationwide Multistate Licensing System) Resource Center. The requirements generally include taking Continuing Education courses and renewing your surety bond prior to your license expiring each year.

Also, remember, if you move or want to work in more than one state, you’ll need to obtain a separate license for each state in which you wish to originate a home loan. While you will have to get additional surety bonds for each state license, the good news is you only have to take the National Test that first time. To obtain additional MLO licenses in most states, you only have to take a few additional hours of state-specific, pre-licensing education and there isn’t more state-specific testing. (The company-level license requirements can vary greatly from time to time, however, so be sure to complete all your research on the NMLS Resource Center.)

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