Owning a Mortgage Brokerage: Pros and Cons

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There are pros and cons to every decision made in life, and the decision to become a Mortgage Broker Business Owner is no different. There are many advantages to going out on your own as a mortgage broker, but there are also some disadvantages that should be considered. In this blog post, we will discuss both the pros and cons of becoming a mortgage broker so that you can make an informed decision about your future.

Hi guys, my name is Megan and I have been a loan officer for 20 years, with the last 12 years owning my own mortgage brokerages and other mortgage services.  In this video, I wanted to give you some insight into what it was like opening a brokerage, going out on my own, and sharing the pros and cons.

Before the Pros and Cons, It’s Storytime!

In 2013, the year I became a Broker Owner, I did not have any time to think about what would go well if I opened a mortgage brokerage, as well as what could go wrong (and boy, can things go wrong sometimes!)

I was happy being a loan officer, closing loans, and collecting big checks.  I never imagined that in the blink of an eye, a decision would be made for me that pushed me into what is now my dream come true.

I walked into the office on top of the world that June.  I had just competed at the Crossfit Games!  Me, a mother of two, a thirty-two-year-old badass, climbing ropes and doing 100 pull-ups in one workout!  It didn’t bother me in the slightest that my pipeline had shrunk down to the lowest it had ever been during my eight-year career.

The owner of the brokerage I worked for did notice my pipeline and he had formed a conclusion that I was planning my empire behind the scenes.
Therefore, when I strolled in that Monday morning, I had no idea what was waiting for me on the other side!  It only took about ten minutes to get the news that I no longer worked at the brokerage and to exit the building.

Wha- wa- WHAT?! I was dumbfounded, but a little curious as to what caused this decision.  I had been the top producer for years and had not done anything wrong or deceitful.  I had also thought about leaving before, even met with other recruiters and owners to find out what was out there.

When I didn’t get the memo fast enough to exit the building, I had my very own Jerry McGuire moment.  My loan processor stood up and made the decision to walk out with me.  The police were called and then another loan officer who worked closely with me came scrambling out five minutes later (and did I mention a closing was taking place during the festivities?)
So, that was the day I made the decision to become a business owner.  I also got served my first lawsuit that week- so much fun!  But, I survived it and wouldn’t change a thing if I had to go back.

In 2013 things were very different than they are today.  There were no Facebook groups and organizations like AIME like there are today.  When I say I was winging it, I was completely and totally guessing at what I needed to do to run a business.

In the end, it was the best thing that ever happened to me.  After 8 years of limitations and not making the decisions that were needed to grow my business, I had a blast growing year after year for the next five years.  I doubled the number of loans I closed from 150 to 300 units just by having the freedom to make the decisions that were needed for my team and my community.

But, it wouldn’t be fair or honest to not tell you about all the things that really sucked getting there.  So I am going to lay out for you the things that made me dance when no one was looking and the crap that almost had me leave the business altogether. So let’s get into the pros and cons of becoming a mortgage broker.

The Advantages of Owning a Mortgage Brokerage

I do stand behind the statement that there are more pros than cons to owning a mortgage brokerage, even though it was hard at times to see that.  Here are my top favorites:

• Unlimited Creative Opportunity- I remember when I worked at a retail lender in 2018 and during the first six months our team was onboarded, we could not get our website, our flyers or our Facebook ads approved no matter what we tried.  The marketing system that had generated business for us for years, did not fit inside the retail lender’s box and we therefore could not gain support or approval.  It was maddening and led to many fights and arguments.  Our business took a nose dive during those six months, which caused more tension.

This does not happen when you own your own brokerage.  You decide what, how, and when you want to market.

• Initial Investment & Startup Costs are lower than many other small businesses you could choose to open.  Offering a service means that there is no inventory, and no special specifications you need to follow.  If it is just you and an assistant, you could get away with opening your brokerage with $10-15,000.  The larger your team, the more you will need to have ready to use as a starting point, but even with a team of 5, I was able to get going, pay their salaries, purchase furniture, and sign up for the accounts we needed for around $50,000.
• If you have a book of business already, you have a lower risk of failure opening a mortgage brokerage,  than if you opened another type of business that you had no experience in.  All you need to do is create projections and a pro-forma and you can see exactly how much business you need to close to break even in a month and how much you will make if you hit your big hairy goals.  I still do this today with our brokerage and I love comparing it to how the financials actually look each month.
• Network of other Brokers – Unlike the lone ranger I felt like when I started my business, there are groups and networks out there that you can plug into today.  I see questions being asked about who to use for this type of service, what wholesale lender is best at this or that, and many other questions being shared in these collaborative communities.
• Complete control over what your commission checks go toward, who you hire, and the products you offer.  No matter what you hear or what someone says, you have COMPLETE CONTROL over the way you run your business and close your loans.
  • Start a Podcast- simply order the gear
  • Hire a virtual assistant from the Philippines – do it!
  • Build a website or use a template- the choice is yours
  • Use 10 lenders or stick to two- your decision
  • Run daily pipeline meetings- whatever you feel is best

Of all the advantages that exist in owning your own brokerage, having the control to build the business that you have always wanted is by far the most satisfying part of the experience.

Disadvantages of Owning a Mortgage Brokerage

Now, I won’t sugarcoat the things that really sucked while growing our business. Deciding to “be your own boss” is not for the faint of heart.  It is a grueling and at times very frustrating experience. Just when you think you have found the answer to a problem, another one pops up.  As soon as you handle the most pressing personnel issue, someone comes to you with another thing that is bothering them.  There are days I feel like I am losing my mind

• Access to structured support – Although the industry has come a very long way and there are many more services that you can outsource as a mortgage broker, there still is not anything that gives you the complete roadmap.

That was until we launched our course- Mortgage Broker FastTrack

It is the first of its kind and is helping Loan Officers avoid many of the mistakes and disadvantages we talked about in this video.  I put a link in the description if you would like to check it out or schedule a discovery call to learn more about what is in the course.

• No all in one system for organizing your pipeline and the banks you work with.  It is at times easier to only have to worry about one lender, one way of reading guidelines, and one answer.  As a mortgage broker, the advantage of being able to get more clients approved, have more products, and discover solutions, does come with its complications.  You and your people have to learn many ways, many lenders, many portals, and many variations.
• Learning Curve of running & owning a business- most of the loan officers that become mortgage broker-owners have never owned or run a business.  This means that there is a pretty steep learning curve ahead of you.   You might have the most incredible loan origination skills in the world, but have you ever had to:
  1. Manage an audit with a state examiner
  2. Come up with comp plans to encourage talent and reward strong operations team members
  3. Develop team-building activities to forge strong relationships that work well together
  4. Ensure that the marketing going out is compliant
• Whether you succeed or fail is 100% on you.  There are no more excuses that the rates really suck at this company or your manager isn’t giving you the ability to add the products you need.  If things go sideways on a loan, you need to explain to the referral partner what happened.  The loan officers that work for you will have expectations

The truth is that no matter what decision you make or where you choose to go, you are going to experience the good with the bad.  You will make mistakes, you will get frustrated and you will achieve things that are beyond what you ever imagined today.

In conclusion, when considering whether to become a mortgage broker, it’s important to ask yourself some key questions. Do you have a solid book of business to build upon? Can you hold yourself accountable with the numbers? Do you have the support you need to manage the operational aspects of the business? And do you have a network of peers you can turn to for guidance?

For me, owning my own mortgage brokerage has been an incredibly rewarding experience. The freedom and ability to create the business of my dreams have been well worth the effort. If you’re considering making the leap, I highly recommend checking out our live sessions and subscribing to our channel for more information.

And if you still have questions, don’t hesitate to reach out. We’re here to help and offer free discovery calls to those who are interested. Thanks for reading and I look forward to seeing you next time!