How to Start a Mortgage Company

So you are wondering how to start a a mortgage company.

Many loan officers in the industry contemplate starting their own mortgage company. After years of lousy commissions, many loan officers recognize that owning their own mortgage company could produce commissions that blow away their current earnings.

Should You Start Your Own Mortgage Company?

If you have been considering starting your own mortgage company, there are a few things you’ll want to consider: (1) it takes a good working knowledge of the industry; (2) it takes a lot of education and experience; and (3) it often requires considerable capital and start-up costs.

Steps on How to Start a Mortgage Company

The following tips will guide you in learning how to start a mortgage company:

  • Decide whether you want to start your own mortgage brokerage company or join an existing regional or national company. Many individuals interested in starting their own mortgage company choose to join an existing company and operate as a net branch because the support and structure of the company is already in place.

Starting your own mortgage company, on the other hand, takes far more time and money. To start your own mortgage company, you will likely need a great deal of financial and industry experience. In addition, regulators will require that you have a good amount of capital in your back pocket before you begin your venture.

  • Get your mortgage/broker license through your state. Each state has specific licensing requirements and laws, and it is up you to educate yourself on these laws. Take classes, read books and get the most up-to-date information available regarding your state’s laws.

  • File an application with your state’s Secretary of State to create a corporation for your mortgage company.

  • Develop a business plan, and decide which markets you will be targeting (i.e., commercial or residential) and which services you may provide to your customers. Some mortgage companies offer special services to specific customers, such as those with less-than-perfect credit. Decide if you will offer special services, and which partners you will need to make this happen.

  • Set up contracts with wholesale lenders. Make it a point to develop relationships with several wholesale lenders, as the more loan products you can offer, the better chance you will be able to serve your customers. Each lender will have their own approval process, so it may benefit you to have contracts with several different lenders.

  • Partner up with a consumer credit report company, an appraiser and a title/escrow settlement company. Your partners will provide your company with credibility and will benefit your company with its day-to-day operations, so it is important to take your time and partner up only with the most reputable and competent companies.

  • Set up an office and everything that goes along with it (i.e., office space, computer, software and office supplies).

  • Develop a marketing strategy. Generate your customers through all possible resources, including the Internet, lead vendors, direct mail and telemarketing. Decide whether you want to develop your marketing tactics in house, or if you will outsource the marketing.

  • Hire loan offers and loan processors, if necessary.

Learning how to start a mortgage company takes time, especially considering that each state has its own set of regulations and guidelines.  However, in the long run, with the appropriate experience and business plan, you can be the owner of a very successful mortgage company in your city.