When learning how to become a commercial mortgage broker, you will need to follow these steps
If you are figuring out how to become a commercial mortgage broker, it is important to remember that long-term success comes one step at a time. But it is attainable.
To help you get the good start that you need, we will explore exactly what a commercial mortgage broker is and how it differs from a home loan broker. We will also break down how to become a commercial mortgage broker, both generally and in Texas and California. Why? Because the licensing requirements vary from state to state.
Here is everything you need to know about how to become a commercial mortgage broker.
As a commercial mortgage broker, you act as a liaison between a business that wants a real estate loan and a lending institution. You would offer advice to companies and help them secure the best mortgage product for their real estate investment or requirements for asset acquisition.
Your essential responsibilities and duties include:
- Collecting necessary documentation
- Ensuring the client meets funding requirements
- Collecting necessary documentation
A career as a commercial mortgage broker also comes with a sales aspect. Additionally, a commercial mortgage broker aims to build relationships with commercial clients, as a way to earn repeat business.
Commercial mortgage broker vs. home loan broker
Commercial mortgage brokers and home loan brokers perform similar services. Both assist real estate buyers in finding mortgage products that suit their budgets and their needs.
The major difference, however, is that commercial brokers arrange loans for commercial properties, which individuals or businesses buy as an investment or to generate income. Home loan brokers, on the other hand, focus on working with people who are buying residential property as a primary home.
A home loan broker also follows a standardized process that determines the loan type a buyer qualifies for. A commercial mortgage broker, meanwhile, reviews the different variables when matching a mortgage product with a buyer.
Curious about a career as a broker? Visit our article on how to become a home broker for more details.
To become a commercial mortgage broker, you will need certain skills and qualifications. These usually include a finance-related degree, experience in the real estate industry, professional certification, and a license. You must also be willing to work on a commission basis.
Typically, employers require you to have a bachelor’s degree in business, economics, finance, or a related field, or experience in the lending or real estate industry. Mortgage brokers also need to have a state license. To obtain this license, you will need to take a class and an exam administered by the National Mortgage Licensing System, or NMLS.
Let’s look at each of the steps of how to become a commercial mortgage broker:
- Meet education requirements
- Enroll in pre-licensure class
- Pass NMLS test
- Register/establish mortgage broker
- Apply for broker license
- Maintain license
- Undergo additional training
Let’s break down each of the steps to becoming a commercial mortgage broker:
1. Meet education requirements
If you want to become a commercial mortgage broker, you must consider how much education you need to get. Most commercial mortgage brokers have a bachelor’s degree, while some have a master’s degree. However, while most commercial mortgage brokers have a college degree, you can achieve that with just a high school diploma or GED.
To improve your chances of employment, as well as improving your earning potential, you should consider getting a bachelor’s or associate degree in business administration, finance, etc.
2. Enroll in pre-licensure class
To become a commercial mortgage broker, you must be well prepared. That means you must be certified and licensed for the job. The first step is to get your license. However, you must first successfully complete a licensure program. This includes an approx. 20-hour class, which covers all the essential topics on federal laws, state mortgage laws, broker ethics, and financial regulations.
3. Pass NMLS test
The next step after you finish your pre-licensure class is to sit for the NMLS exam. It is also known as the SAFE Mortgage Loan Originator Test. The test includes state guidelines, mortgage practices, and regulations of the person sitting for the exam. You are required to achieve a score of 75% to clear the examination successfully for both the state and federal portions.
Only 57% of those who take the test pass during their first take. Get a head start by going through our guide to help you get ready for your MLO test.
4. Register/establish mortgage broker
Next, you must register your mortgage business. The requirements for the registration process are different in each state.
Through the state’s licensing authority, you must register your company to include details like the business name and location. When registering, you must also consider whether you want to provide broker services online or through a physical location. In fact, some states require a physical location.
5. Apply for broker license
When applying for the mortgage broker license, find out what the NMLS requirement is for your state. Next, clear the licensing and examination fees, get the bond, and submit the application to get your license.
You may, however, need to get your mortgage broker bond for a license. This helps protect the customer if you fail to follow the rules of your state for operating as a broker. It also proves that you are credible for the job and will provide the best service. The amount of the brokerage bond varies by state.
6. Maintain license
It is a good idea to keep up with the mortgage lending development of your state. You must also keep your license open by finishing the continuing education courses each year. When renewing your license, show documentation stating your continuing education. Doing so keeps your license current and guarantees your clients the most up-to-date information.
7. Undergo additional training
To be a successful commercial mortgage broker, continue your education and training. To improve your industry knowledge, you should consider taking online classes (or offline classes) when it makes sense for you. Additional education and training will also improve your understanding of various aspects of state and federal regulations.
To become a commercial mortgage broker in Texas, you must first get your state license. Getting your license will enable you to work at or operate a mortgage brokerage business in Texas. It also acts as a guarantee to your clients that you meet all state and federal requirements.
While there are federal requirements to becoming a commercial mortgage broker, there are also state-specific requirements. Let’s look at how to become a commercial mortgage broker in Texas:
- Educational requirements
- NMLS exam
- Document/application fees
- Maintaining license
Let’s take a closer look at how to become a commercial mortgage broker in Texas:
When determining how to become a commercial mortgage broker, remember there are educational requirements.
1. Educational requirements
Regardless of the agency you go through for licensing, you must use the National Mortgage Licensing System (NMLS) to become a commercial mortgage broker in Texas.
The first step is to ensure that you have met all the pre-license educational requirements. You can either apply through the Department of Savings and Mortgage Lending (23 hours) or the Office of the Consumer Credit Commission (20 hours). Make sure that you check with each agency about their requirements before you enroll in any classes.
Federal law requires that all applicants complete 20 hours of education through SAFE courses. You can take this after completing the state-required pre-license education.
2. NMLS exam
After you pass the exams, you must complete the Texas and NMLS license applications, which include:
- Business plan/organizational charts
- Company formation documents
- Credit reports
- FBI/state criminal history/background checks
- Financial statements
Throughout the process of becoming a commercial mortgage broker, many documents and application fees are required. These usually include:
- Department of Savings and Mortgage Lending application: $479 for loan originators; $275 for a mortgage company license
- Office of the Consumer Credit Commission application fee: $325
- NMLS application fee: $30
- FBI Criminal Background Check: $35.25
- Credit report: $15
4. Maintaining license
After completing your license, remember that you must maintain the license. This means you must keep your NMLs account valid, with up-to-date contact info.
To maintain your license, you are required to complete eight hours of continuing education annually. Every year, you should also renew your license on November 1. Check NMLS for information on what is necessary for license renewal prior to that deadline.
To learn more, read our detailed write-up on becoming a mortgage broker in Texas.
Because there are certain federal requirements, there are similarities to becoming a commercial mortgage broker in all states. As mentioned, however, there are also state-specific requirements you must know about.
Here is how to become a commercial mortgage broker in California:
- Meet minimum requirements
- Gain experience
- Complete broker courses
- Get fingerprinted
- Submit application and fees
- Schedule an exam
- Pass the real estate broker exam
Here is a closer look at each:
1. Meet minimum requirements
The minimum requirements you must meet to become a commercial mortgage broker in California are:
- at least 18 years old
- a California resident (if out-of-state, applicants must submit a Consent to Service of Process form)
- fill out exam and license application honestly. If you are dishonest, your application will be denied
2. Gain experience
Applicants in California are expected to have some real estate experience before becoming a commercial mortgage broker. The recommendation is to have been a full-time real estate agent for two of the previous five years (or part-time for four years).
There are, however, other options. One is to earn a degree from an accredited four-year university or college with a major or minor in real estate. Another option is to gain two years of sales experience. This includes working as a real estate developer, a property manager, a licensed real estate professional in another state or country, a builder, escrow officer, or loan officer for real property.
3. Complete broker courses
Before applying to take the broker exam, you must complete eight college-level mortgage broker courses (unless you are a part of the California State Bar). These courses include:
- Legal aspects of real estate
- Real estate appraisal
- Real estate accounting or economics
- Real estate finance
- Real estate practice
- Three electives
4. Get fingerprinted
This does not apply to real estate agents who have been fingerprinted when applying for a salesperson license. If, however, you are getting a license for the first time, you must go to a live scan service in California and get fingerprinted.
5. Submit application and fees
Next, fill out the Combined Broker Examination and License Application on the ca.gov website. Here, you will have to attach supporting documents proving you meet the requirements for education and experience.
You have the option to self-schedule the exam or have the DRE do it for you.
The last step in this portion is to pay for the license and exam fees. You can pay by check, money order, credit card, or cashier’s check (not cash).
6. Schedule an exam
To schedule your exam, you have two choices. One is to have the DRE schedule the exam for you. In that case, you will get an Examination Schedule Notice with the date, time, and location (based on what you chose on the application). The other option is to self-schedule – you will be sent an authorization telling you that you can now choose a test time.
7. Pass the real estate broker exam
From the time your application is filed, you will have two years to pass the real estate broker exam. The exams are given every week at five different locations across California. All you need to bring with you is a valid photo ID. You will have five hours, spread out over two 2 ½ hour sessions to complete the 200 multiple choice questions.
When determining how to become a commercial mortgage broker, it is important to understand licensing and how the process varies depending on your state. Remember: the more knowledge you have, the better off you will be.
If you're truly interested in becoming a commercial mortgage broker, take the time to look at the mortgage professionals we highlight in our Best of Mortgage section. Here you will find the top performing mortgage professionals, including mortgage brokers, across the USA.
Did you find these tips on how to become a commercial mortgage broker useful? Have you recently earned your commercial mortgage broker license? Let us know in the comment section below.