How to Become a Loan Broker

How to Become a Loan Broker

Becoming a loan broker is probably one of the best options to earn a good amount of money in a very short period of time. Read on to know how to become a loan broker.

Due to an increase in the people applying for loans, loan coordination and broking businesses have generated more career opportunities than any other business. These businesses have certainly proven to have extraordinary earning potential. Loan brokers are important and responsible people in these businesses who carry out loan granting duties.

Who is a Loan Broker?

A loan broker is a middleman who is responsible for helping and assisting prospective buyers in applying for and securing loans. His primary duty is to bridge the gap between potential borrowers and lending entities who are willing to offer loans. He carries out all loan formalities which include preparing the loan application, and handling the documentation needed for taking the loan granting process further.

Mortgage loan brokers comparatively earn more income than commercial ones, as the deals they make are of a high value. They make their own money by assigning a certain percentage of commission, creating a customer base, and generating referral business. A commercial loan broker generally deals in commercial loans, and recommends the best financial packaged plan for his clients.

How to Become a Loan Broker?

In some US states, there are no hard-and-fast rules for becoming a loan broker, and licensing may not be needed. However, there may be certain regulations in some states. You need to get in touch with a local licensing authority for the purpose of determining the requirements for becoming a loan broker in that particular region. If your state requires you to obtain a license, you are required to go through proper licensing procedures and formalities. You need to pay a certain application fee, and submit the application through the National Mortgage Licensing System (NMLS) for obtaining a surety bond. You also have to provide fingerprints, and undergo a criminal background check. There may be some additional requirements which may vary from state to state.

It is better to have an educational background in the finance field if your want to become a loan broker. A potential loan broker may choose a course in banking as well. However, this is not obligatory for becoming a loan broker. Even a general knowledge of loans and mortgage operations will do. The related education plays a very important role in getting customers to trust a new loan broker's expertise and credibility.

You may also undergo some specialized trainings for getting into the loan broking industry. Such training would be very useful in helping you develop the kind of knowledge and skills that are required to assist borrowers in receiving loans without any hassles. You may undergo such training in Brick and Mortar (B&M) schools, or take the help of some online programs. You may even think about acquiring related certifications which would be helpful in carrying out the business smoothly. Many states offer a loan brokerage exam, and it's successful completion leads to the certification. You need to get at least 75% of the answers right in order to receive the certification.

After you have undergone training and received the certification, you may choose to work under the supervision of a reputed loan broker, or look for an entry-level job in a brokerage or mortgage company. You also have the option for starting your own business which would most importantly require capital and also an effective marketing plan. You may promote your business by advertising in local newspapers and business directories. Get in touch with people in the related field, and create a network which will later help you get good business.

If you are thinking how to become a loan broker, you just need to have the required understanding of loan, finance, or banking operations. Moreover, it is also recommended to undergo the related training and receive the certification for taking your business to the top.