The 2 Ways To Start Your Own Mortgage Company
Rob Lawrence, Chief Mortgage Warrior Of Battlecall.com
One of the most frequent questions I get asked from loan officers is, "How can I go out on my own and start my own mortgage company?" Often times, the person is sick and tired of low-commissions, office politics, too restrictive a time-schedule, etc. There are hundreds of reasons why they want to get out.
They see the money other loan officers are making, and wonder why they aren't making that kind of money too? After all, they are doing the SAME work. The difference, very often, is just in the commission payout. Branching out on your own, is an instant pay-raise and can often double or triple the amount of commission you are currently earning.
There are two ways to start your own mortgage business.
1. Get your own broker license from the State.
2. Join an existing regional or national company as a "net branch".
There are advantages and disadvantages of each. First off, getting your own license from the State isn't easy. There are certain financial and experience thresholds that regulators look for before granting a broker's license. Also, the capital requirements and start-up costs make this option extremely cost prohibitive. And, you'd be responsible not just for bringing in business and selling loans, but also hiring a processor, doing all the accounting and back office tasks, auditing, renting office space, etc.
Not to mention, that you have to go and set-up relationships with each lender you want to do business with. And some of them are pretty picky about who they deal with. If you're a one-person company, you can forget about incentives and low pricing. You're simply not worth their time.
By going entirely on your own, you can see quickly that your time would be exhausted with "chores", leaving little available time to sell loans--unless you plan on working around the clock! And how long would a mortgage company last without new business?
But, getting your own license would give you 100% commission. Isn't that what you want? 100%?
Another option is join an existing net branch company. Net branches are very popular in the industry and give you a number of advantages over going it alone.
A net branch is simply of way of doing business. You create your own personal branch, but under and existing mortgage company. You have freedom to do what you want and have all the benefits of being a large corporation.
Firstly, when you join a net branch, you are joining a ready-made structure with back-office support in place. That means they handle all the auditing, the compliance checks, the follow-up etc. Some even do processing. For this, they take part of the commission. So, instead of 100% (from going solo), you might just get 70% to 80%. Not bad, considering what you are earning currently. And you don't have all the other regulatory headaches to contend with.
Net branches are typically 1 to 2 person shops, mostly professionals operating from their own home office, and selling on the road. In today's digital age, this is entirely possible as most work is submitted electronically, or done over the phone and fax. Location is irrelevant.
By freeing-up your time--not getting bogged-down in the details--you can focus on bringing in new business and earning more money.
Remember, each net branch is different, and each has their own set of processing rules, guidelines, commission splits, fees, etc., and all should be examined closely before making a final decision.
Whether you decide to get your own brokers license or join a net branch is up to you, it depends on what your long-term goals are. Some people want 100% control over their destiny and want to create something new. That's fine. That's how entrepreneurs succeed. But, others don't want the hassle of starting an entirely new business--they just want a higher paycheck to reach their goals.
In my next article, I'll discuss a little bit more about how to choose a net branch and the pitfalls to look out for.
Got an opinion? We want to hear from you. Post your thoughts or comments here in our Mortgage Warrior Forum. Come join the conversation and say hello...onward mortgage warrior!
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