FREQUENTLY ASKED QUESTIONS

How long does it take to get my company license approved?
The approval process for a new company license usually ranges from 3 to 5 weeks, though the exact time frame depends on the state where you register.

How long does it take to become an independent mortgage broker?
On average, completing the requirements to become a licensed independent mortgage broker—also referred to as a loan originator or loan officer—takes about 45 days. However, this timeline may vary depending on your state and your ability to pass the necessary exams and background checks.

FEES, COSTS, & COMPENSATION
What are the startup costs for opening an independent mortgage brokerage?
Startup costs for an independent mortgage brokerage vary by state. For example, in states requiring a physical office, costs typically reach around $10,000. In states without such requirements, costs generally fall between $5,000 and $7,000. Additional expenses include licensing fees, business registration, surety bonds, and legal fees for maintaining a compliance management system.

What are the costs and requirements for setting up a credit reporting account?
Establishing a credit reporting account for your brokerage typically costs around $120.

How does compensation work?
When you close a loan, the lender pays you a commission. Commission rates vary based on factors such as loan type, term length, and lender. The terms governing your payment structure are outlined in a Loan Officer Compensation Plan.

RESPONSIBILITIES
What are my responsibilities during the loan process?
As an independent mortgage broker, you manage the borrower relationship and handle tasks such as:

• Advising on loan options.
• Submitting loan applications to lenders on behalf of borrowers.
• Providing required documentation during underwriting.
• Ensuring borrowers receive all necessary disclosures during the loan process.

Do I need a commercial office space, or can I work from home?
This depends on the state. In states requiring a physical office (Arizona, Hawaii, Missouri, Nevada, and Texas), working from home is not an option.

PROCESS
What technology will I use?
You’ll rely on:

• Loan Origination Systems (LOS): Manage the lending process and attract homeowners via your website.
• Customer Relationship Management (CRM): Streamline communications without hiring a specialist.
• Point-of-Sale (POS) Systems: Allow clients to complete applications, upload documents, and e-sign forms.

Certain wholesale lenders may provide access to their technology, helping you reduce startup costs. For more details, visit our blog post, “Must-Have Tech Tools for Independent Mortgage Brokers.”

What does compliance involve for a new brokerage?
Compliance is critical for your business. You’ll need a compliance management system to adhere to all state and federal regulations, including:

• Issuing required disclosures.
• Creating and using marketing materials.
• Maintaining records.
• Handling licensing and renewal processes.

For detailed guidance, visit our blog post, “Mortgage Brokers’ Step-by-Step Guide to Compliance.”

Do I need to hire a processor?
While not mandatory, we highly recommend hiring a processor. A processor compiles and organizes borrowers’ information and financial data, streamlining the loan application process with potential lenders.