Mortgage brokers have a bright job outlook. According to the Bureau of Labor Statistics, demand for loan officers (a category that includes mortgage brokers) will grow by 11% between 2016 and 2026, which is higher than the national average growth for all jobs. Even better, the number of jobs available in parts of New Jersey and the local median wage are both higher than in many other parts of the country. You must do everything from obtaining mortgage broker bonds to completing training and testing to work legally as a mortgage broker. In this post, we will show you what the work involves and what the state requires. Becoming a mortgage broker promises to be a satisfying and sustainable career path, but it’s not an overnight process.
What Do Mortgage Brokers Do?
Mortgage brokers work as intermediaries between individuals who need home loans and lenders who offer home loans. Traditionally, borrowers tell the mortgage broker how much they want to borrow at what rates. Then, it’s the broker’s job to find lenders willing to lend on those terms, or close to those terms. The mortgage brokers also liaison between borrowers, real estate agents, lenders, and title companies to ensure that loan issues don’t derail home sales. The lenders typically pay the mortgage broker for finding them qualified loan applicants, but sometimes it’s the borrower’s responsibility to pay. Mortgage brokers are important because securing a home loan can be incredibly confusing, especially with so many competitive options on the market. Homebuyers appreciate having an expert who can walk them through the process, and lenders appreciate working with qualified and confident borrowers. Mortgage brokers have become an essential part of the real estate market, which is why these professionals will be in demand for years to come.
Do You Need a Specialized Degree?
Mortgage brokers only need to have a high-school diploma or a GED. Earning a college degree in something like business or economics can be helpful, but it’s not strictly required. This is good news because it means you won’t need to invest significant amounts of time and money to earn a degree. However, you will need to prove you’re qualified and capable according to standards set by the state of New Jersey. For instance, you will need to mortgage broker bonds to prove to state regulators that you will follow the law and take financial responsibility if you don’t.
What is a Mortgage Broker’s License?
You must have a license to work as a mortgage broker in New Jersey. It’s illegal to provide brokerage services without one, and if you do, you could be subjected to fines, jail time, and being barred from ever getting a license. Therefore, you need to do everything required to earn and maintain a license. Here are the primary requirements:
- Complete Pre-Licensing Training – All brokers must complete a training course administered through the Nationwide Mortgage Licensing System (NMLS). The training focuses on federal law, ethics, non-traditional mortgage lending, and elective coursework. In total, it involves 20 hours of instruction. Training is available at state-approved schools located throughout New Jersey and online.
- Pass the Test – Mortgage brokers are also required to pass the Secure and Fair Enforcement (SAFE) Mortgage Loan Originator Test. The test has one section focused on national mortgage lending practices and another focused specifically on New Jersey. Test takers must correctly answer 75% of the questions on both tests to pass. As of 2019, it costs $110 to take the test.
- Provide a Financial Statement – New Jersey requires mortgage brokers to provide an audited financial statement proving they have at least $50,000 in assets. This requirement helps keep individuals with spotty financial histories out of the mortgage lending industry to reduce unscrupulous behavior and boost consumer confidence.
- Obtain A Bond – Mortgage brokers bonds help consumers seek compensation if brokers ever break the law during a lending deal. All brokers must obtain a bond with at least a $150,000 limit and renew the bond annually to keep it active. The actual price of the bond is a small percentage of the total value, and the final figure is based on your credit risk.
- Submit to a Background Check – In order to keep brokers with ethical issues out of the industry, New Jersey requires all applicants to submit to an FBI background and fingerprint check. The application could be denied because of red flags like a theft conviction.
Start Preparing for a New Career
Earning a license costs around $1,300, not including the investment in mortgage broker bonds or FBI processing fees. How quickly you complete the requirements is up to you, but it’s not unrealistic to be fully licensed in a matter of months. Becoming a mortgage broker is such an exciting opportunity because it’s a professional position with a relatively low barrier to entry.
Your next step is to check with the state of New Jersey Department of Banking and License to explore the current licensing requirements and exact details – they may have changed since this piece was published. You should also sign up for pre-licensing training and begin studying for the SAFE test. Finally, look ahead to the rest of the requirements, like obtaining mortgage broker bonds. Applying for a bond quote is free, and it provides you with important information about bond costs and requirements. Viking Bond Service can assist you with every step in the process, including helping you find the best rates available. To learn more about what we do, explore this overview all about surety bonds.