Opening Up Your Own Mortgage Brokerage Business

Opening up your own mortgage brokerage business can be a rewarding and lucrative career move. However, being a successful mortgage broker requires more than just a knowledge of mortgage products- it also requires great management skills, a little bit of tech know how and the ability to navigate the ups and downs of the market.

In this blog post, we’ll go over the day-to-day responsibilities of running a mortgage brokerage business and how to create systems, processes, and acquire the resources needed to make finances and human resources as easy as originating a mortgage. Whether you’re a loan officer or mortgage broker already, these suggestions will help you on your way to learning how to efficiently run a mortgage business..

When you make the decision to enter the ranks of other mortgage entrepreneurs, it can feel overwhelming and imposter syndrome can start kicking in.. I know it did for me! I even tried going back to retail, but that was the wrong choice and I went right back to running my own business. Let me start by explaining why its worth learning how to run your own mortgage business!

When we dedicate the years to building a book of business in the real estate industry, we are what I call intrapreneurs. We are building a business within a business. We take the risk of only getting paid when we close a deal.. We think about how to make the process better for our clients.. If you run a branch at a company, you are running and managing a P&L.. All things that entrepreneurs do. But, understanding the reality of what you are giving up when you are an intrapreneur is important.

You are never truly the owner of your business
You do not write your own checks
You do not own your license

And this means that you can never be paid for your business when you are ready to step aside or pivot.

This is a hard concept so let me explain just a little bit further. When we originate and it’s only us, we in essence have a job.. It’s a job if you own it or if you work for someone else.. But when you cross the bridge over to building a team, having other loan officers working at your company and beginning to have systems that other people are plugging into, you have entered the world of building a business.

Think of it this way, if you had $100,000 to invest in something and your options were:

  • Insurance agents book of business that made $5,000/month after paying the admin who managed it.
  • A real estate agents database.
  • Investment Property – that gave you $1,500 a month in rental income.

So, now that you understand more about why its important to have a business that is worth something to someone else, what does it look like managing and running this business.. Rome wasn’t built in a day and we all start somewhere.

Create a Business Plan:

The key to running any business is creating and following a business plan, and mortgage brokerage is no exception. Your business plan should include objectives, financial projections, marketing strategies, and target markets. Potential financial projections for your brokerage could include: Loan Origination Income, Loan Servicing Income, and Rate Lock Extension Fees.

Your plan should be crafted with both short term (1-3 years) and long term (3-5 years) plans in mind. The most important step in creating and following a business plan is regularly reviewing and auditing your activity and results. One of the ways we manage our brokerage and keep working forward getting better is by breaking the business down into categories:

  • Licensing & Compliance
  • Vendors & Lenders
  • Finances
  • Sales & Prospecting
  • Marketing

This helps us look at all of the areas at once and choose the next most important thing to tackle. When you are running a business, it is all about prioritizing and working on your business, not always in your business.

Developing a Lead Pipeline

Developing a pipeline of leads is critical to the success of your mortgage brokerage firm. Developing a lead pipeline can take time, often times it can take six months to a year to develop a significant number of leads. It all boils down to creating and executing effective marketing strategies.

This may include digital marketing channels such as Search Engine Optimization for your website, Google AdWords, or targeted Social Media ads. Relationship marketing is when you begin focusing on building recurring relationships with realtors, builders or financial planners, or CPA firms. Having a partnership becomes really valuable here if it brings in a steady flow of business each and every month.

And the final way we do this is by staying in touch with our clients, even after we have closed their loan. The best way to do this is to make sure your messages are about things they now care about, which is not mortgages. Instead, focus on things such as:

  • The best renovations for homeowners
  • Ways to lower their utility bills
  • How to start a garden
  • There are so many topics you can choose from that will make you that trusted expert.

Building a Team:

The third key to running a successful mortgage brokerage business is building a team. You may be thinking, “I’m not looking to build a team, it’s just me.” The truth is, even starting with a small staff of one to two persons can help you later grow your business once your leads and customer intake increase. Recruiting employees that are well-rounded with a positive work ethic, is highly important. From hiring talented loan officers, processors, or even outsourcing any part of your business, it all boils down to being prepared for growth. Amongst loan officer and mortgage broker circles, a key nurturing principle of building a solid team is investing in continuous education opportunities as well taking the time to build teamwork and camaraderie between your different team members.

Creating Systems and Processes

As a mortgage broker, you will face hundreds of tasks every day that range from loan origination, submissions, approvals, documentation, and follow-ups, just to name a few. But, here’s the secret: create standardized systems and processes to deal with these tasks. By doing this, you’ll streamline your daily activity, work more efficiently, retain employees, and reduce manual errors. A well-crafted process that works, means you will no longer have to reinvent and recreate your processes. Decisions will no longer be made or swayed by intuition, but rather by systems and guidelines set in place. Make use of technology to set up these systems and processes. Utilize software solutions that will streamline your back office to auto-updates, autopilot, notifications, reminders, appointments etc.

Monitoring Performance and Adjusting as Needed

To be an effective mortgage broker business owner, monitoring performance is critical. This involves setting up Key Performance Indicators (KPIs) to measure and track staff and overall business performance. KPI’s can range from leads, conversion rates, closing rates, work-in-progress (pipeline), revenue growth, customer satisfaction reports, quality, and so on. Having these visible on week-to-week or monthly scorecards will allow for more informed decision making, improve accountability, and guide adjustments.

As a mortgage broker/business owner, many responsibilities will fall on your plate. However, with the right strategy, systems, and processes in place, you can run and manage your brokerage business efficiently. By doing this, you will achieve long term financial success. Consider starting with creating a business plan and identifying long term and short term objectives, developing a consistent pipeline of leads and customers, hiring and training employees, implementing systems, and monitoring performance regularly. By utilizing these key elements, you’ll be well on your way to operating a successful and thriving mortgage brokerage business.

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