Wanting to start your own mortgage business may sound like a crazy idea in 2020, amidst all the chaos and economic uncertainty. But if you consider it closely, this idea has a certain appeal. An average mortgage broker earns $92,265, with higher averages in big cities like over $130k in New York and over $152k in San Diego. That’s a pretty solid income, when compared to a nationwide average salary of $48,672.
Benefits of Mortgage Brokerage
Here we’re assuming that you are familiar with the basics, have relevant education, and some experience in the real estate sector (potentially we can have 2 interlinking articles, second one about the very basics of how to get in the industry). Why choose the mortgage brokerage though? Well, there are a few reasons to get into this industry:
Relatively low cost to enter.
Sure, you’ll need to register an LLC (we’re looking at roughly $300-500 investment), get your NMLS license (which costs around $1500), and obtain insurance. But apart from that, you don’t need to buy expensive equipment, rent a spacious office, or hire many employees.
Low overhead costs.
The mortgage brokerage business wasn’t that expensive to operate even before 2020. But with COVID-19 in the equation, many processes changed drastically. Modern technology enables a much leaner, cost-efficient mortgage business by utilizing co-working spaces or even work-from-home setups instead of offices, cloud-hosted documents and digital signatures instead of loads of paper, and virtual home tours instead of in-person ones.
High income potential.
When it comes to brokerage, the sky’s the limit. With an average commission of 2.25% per loan, the field favors hungry and confident salespeople. With good planning and strategic marketing, you’ll do just great.
Current Industry Trends
We can’t ignore the pandemic ravaging the country and thrashing the economy though. At this point, it’s difficult to suggest getting into a business in ANY niche (unless of course, if it’s a production of face masks, or some remote-work technology). However, there are some trends that can give us hope amidst all the chaos around.
Mortgage rates are at record lows.
This one is a complex issue; it’s impossible to state clearly whether these low rates are good or bad. It has certain negative implications, but at the same time, low rates make housing much more accessible. The whole process is still slow due to uncertainty, but once the situation starts to stabilize we can expect a housing market boom — especially since millennials are finally becoming a force in the housing market. Experts predict that low rates aren’t going away anytime soon.
There’s a refinancing boom out there.
With such low rates, it’s no wonder that people are looking to refinance their mortgages. In fact, now is probably the best time to do so. As a mortgage broker, you can help your clients to find the best deals, if they haven’t done this yet.
The whole sector is undergoing a massive change.
Let’s admit it, the health crisis disrupted the whole real estate sector. Badly. And a lot of players aren’t going to make it through. But as with any crisis, it offers plenty of opportunities for those open-minded and bold enough to embrace the change. Property owners aren’t willing to risk having visitors? Virtual tours are a great solution. Learn how to use them properly, and you’ll have an edge over your competition. Paperless processes aren’t a gimmick anymore, they are a necessity. Can you implement these processes efficiently in your business? There are many similar trends and your adaptability will determine how you will weather this storm.
We don’t need to state yet again that we’re going through “difficult and uncertain times,” you already know this. But in great uncertainty often lies great opportunity. Who knows? Maybe if you start now, you’ll end up in a terrific position when the economy finally begins another ascent?If you’re interested in trying your hand at starting your own mortgage business, we have an article that outlines some of the steps you should be taking next.
What’s your take on this? Is it best to wait until more stable times, or is it better to take a risk and dive in right now?
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