How to Start a Mortgage Lending Company?

A mortgage lending company acts as a middleman between people and banks for lending mortgages for their clients. Such companies work with a lot of clients to simplify the process of it. If you are also an emerging entrepreneur and want to build your own mortgage lending company, you should follow some steps.

Apart from getting the mortgage license, these steps are necessary to help you develop a business plan, create social networks and urge you to understand rules and regulations and the minor details of a lending company.

Keep reading to learn more about this subject!

6 steps for you to start 

Make a business plan

Just like everything needs careful and thorough planning, you need to develop a business plan for your mortgage lending company. This plan should be clear enough to explain all the operational steps of the company. It can extend to up to 25 pages, so cover every aspect possible for creating one.

Consider the type of mortgages, transaction volume, office location, marketing strategy, financial support, and timeline. A solid plan must include ways to produce the profit for the company’s operating costs.

Establish a business entity

After you have developed a solid plan, you need to establish a business entity by filing with the state. You need to find a unique name to represent your company. It is better if you hire an attorney to manage all the tasks regarding establishing your company’s proper legal structure.

You will be given a state tax identification number. Once you complete the state registration, you have to register with the Internal Revenue Service (IRS)  and receive an Employer Identification Number (EIN) for your company.

Get insurance to protect your business

If you decide to run the company in a physical office, you need general liability to protect your building. Moreover, you need professional liability insurance and a surety bond to protect your business from any losses if the company fails to meet the clients’ demands.

An insurance agent familiar with commercial policies can give you detailed information on the insurance policy and the coverage amounts as per state.

Get NMLS certification

The National Mortgage Licensing System (NMLS) registers the individuals and companies that offer mortgage lending services. To get certified, you have to fill Form MU1 to cover your company’s essential information, financial history, and current situation.

To determine that you have the essential knowledge related to the mortgage industry’s rules and regulations, you have to take the NMLS exam. You must secure a 75% score to pass the exam and get the license.

➡LEARN MORE: How to find out if a property has a mortgage lien?

Get certified by your state

After getting certified by the NMLS, get your state license. Every state has different agencies to provide mortgage licenses. In some states, it can be multiple agencies.

When you start the registration process with the state, you have to file your business plan, financial details, credit report, surety bond, and insurance liability about your business. You may have to get the mandatory educational program to obtain or maintain your license in some states.

Build a strong network

Once you are done with all the crucial steps to represent your company officially, you have to develop strong networks. Your local contacts will be your first approach to get clients. Powerful marketing and continuous presence on social media will help you attract multiple opportunities.

Your local chamber of commerce can also serve as a perfect entity to build strong networks. Joining qualified and competent associations such as the National Association of Mortgage Brokers (NAMB) also offers you various networking opportunities.

Keep in mind

Never forget to consult experts in the field to get a clear idea of what you should expect and be doing in the mortgage industry. When you start the process, don’t expect to see sudden results, your new mortgage lending company demands your time and effort.

With effort and time, you can become the owner of a successful mortgage company and help many people out there.

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