The Beginner’s Guide to Starting a Career as a Mortgage Broker in California
California’s booming real estate is a land abundant with opportunities for professionals.
From real estate agents and realtors to mortgage loan officers and brokers, the Golden State provides the path to a successful career to thousands.
If you are someone who wants to join a thriving, fulfilling profession while having the flexibility to set your own working hours, a career in mortgage financing might be for you.
One of the career paths you can choose is working as a mortgage broker in California as it is a growing, in-demand profession with a positive job outlook for the future.
Experienced mortgage brokers in CA can make as much as $131K annually plus get opportunities to earn commissions and enjoy additional perks and benefits.
Even the average salary is an impressive $75K which means you can achieve your goal of building a financially secure career right from the start.
Plus, you will get opportunities to advance your career as you gain experience and skills.
As a high-earning, flexible career path, working in the financial and mortgage industry requires meeting specific educational and licensing requirements.
Since mortgage brokers deal with sensitive private information and financial records, they are required by California law to meet the minimum standards for education, ethics, trust, and licensing.
Without a state-approved license, you will not be allowed to work with individuals and clients. Hence to start your career and practice, you must earn your mortgage broker license first.
Getting a license might seem confusing or sound overwhelming, but if you approach it in a step-by-step way, it is a breeze.
Whether you are a complete beginner looking for your first job or an experienced professional wanting to switch careers in the mortgage lending industry, this article will help you get started.
We have put together this in-depth guide to cover all the important aspects so you can learn how to become a mortgage broker in CA and achieve your professional goal.
Types of Mortgage Licenses in California
California has multiple state agencies and authorities who have the power to grant licenses to professionals.
In California, there are two distinctive license categories for lenders that allow you to work as a mortgage loan originator or broker.
For example - if you will be working with residential buyers who want to finance their home purchase, you must obtain a mortgage loan originator (MLO) license. With this license, you will be legally able to originate and disburse mortgage loans in California.
However, if you want to work with and broker loans with financial lenders only, you need to obtain a mortgage broker license in California.
In this case, you will have to follow the licensing guidelines issued by the California Department of Real Estate (DRE) and the Nationwide Multistate Licensing System (NMLS).
As you might have guessed, each license type comes with its unique requirements and qualifying criteria.
Let us give you a brief overview of the different types of mortgage broker licenses available.
- Residential mortgage lender: If you want to broker or service residential mortgage loans anywhere in California, you need to apply for this license type. With this license, you can assist consumers in obtaining mortgage financing for residential properties.
- Finance broker: If you wish to manage, service, or broker consumer-specific loans and financial products in California, you need to obtain this license. With this license, you can only work with creditors and loan originators with a finance lender license.
- Real estate broker license: If you want to practice as a mortgage broker and a real estate broker in California, you can apply for this combined license type.
Now that you have an idea of the type of licenses. Next, let us give you a step-by-step overview of how to get a mortgage license in California.
Becoming a Mortgage Broker in California
If you wish to serve the people of California and do brokerage on behalf of financial institutions and credit companies, you need to fulfill the licensing requirements established by the California DRE and the NMLS.
The California DRE processes all the licensing applications through the NMLS and issues the licenses on its own.
Here are the steps required to earn your California mortgage license and start your career.
Step 1: Meet the basic eligibility requirements
The California DRE requires all applicants to meet the basic statutory requirements to be eligible for a mortgage broker license. These include:
- You should be at least 18 years of age or older
- You should be a legal resident of California
- You must have a high school diploma or GED equivalent
Although having a formal bachelor’s degree in finance, accounting or business administration is not mandatory, it is highly desirable by employers.
Step 2: Fulfill the NMLS educational qualification
According to the California DRE, all aspiring mortgage brokers must meet the minimum eligibility requirements to qualify for a license.
To do so, you must complete 20 hours of NMLS S.A.F.E-approved coursework, also known as pre-licensing education from a state-approved and accredited education provider.
The 20 hours of education must include mandatory courses and electives including:
- Federal laws and regulations (3 hours)
- Ethics (3 hours)
- Non-traditional mortgage lending (2 hours)
- General electives (10 hours)
- State-specific courses (2 hours)
Students can choose to join a real estate school or classroom-based learning program to complete their pre-licensing education.
Many students prefer to enroll in an online education provider to learn virtually via online classes as it is more convenient and time-saving compared to going to a physical classroom.
Step 3: Pass the NMLS SAFE licensing exam
As per the California DRE, all applicants must pass the licensing exam to become eligible for applying for a mortgage loan broker license in California.
After you have successfully completed the mandatory pre-licensing coursework, the next step is to take the MLO licensing exam in California.
You can schedule it on the NMLS website if you have your unique NMLS ID and credentials.
The test consists of 115 multiple-choice questions based on the pre-licensing course curriculum and to clear the test, you must score at least 75 percent or above.
Did you know that the passing rate for first-time applicants is just 58 percent? To improve your odds of success, it is important that you enroll in a real estate test prep course.
By doing so, you can get access to the guidance, training and learning resources needed to take your preparation to the next level.
Taking mock tests and practicing with sample questions is another way to boost your confidence and exam readiness.
Step 4: Complete the background verification
Mortgage brokers deal with financial reports, credit history, income proofs, and taxation-related documents for work.
Due to the sensitive and personal nature of information, it is mandatory for all aspiring mortgage brokers to meet the standards of ethics, trustworthiness, and integrity.
To do so, California-based applicants must complete background verification and a federal criminal history check.
One of the mandatory CA MLO license requirements, it is important for all applicants to submit their electronic fingerprints along with a credit report on the NMLS online portal.
It will cost you around $37 to complete this step along with $15 for getting a credit report.
Step 5: Complete and submit your NMLS application
After completing the background check and federal verification step, you can submit your official mortgage broker license application to the California Department of Real Estate.
To complete this step, you simply need to sign in to the NMLS portal with your unique NMLS ID.
After that, you need to pay a one-time licensing fee of $300 along with an application processing fee of $30.
If your application gets through and all the above steps are completed duly, you should receive your CA mortgage broker license within a few weeks.
Step 6: Find a sponsorship from an employer
Congratulations on earning your mortgage broker license in California. However, you need to activate it first before you start practicing in the industry.
To activate your license, you must find a sponsoring employer and submit the proof to California DRE via the NMLS portal.
This step is mandatory as per the NMLS SAFE Act which requires all newly licensed brokers to work under the supervision of experienced, senior mortgage brokers.
Upon submission of the employer sponsorship and post verification by the department, your license will be activated.
What are the duties and responsibilities of a mortgage broker
If you like numbers, analysis, and finance and want to build a thriving, successful career, then working as a mortgage broker might be the ideal profession for you.
The job profile requires you to do more than just push papers - you will be at the center of action for everything related to mortgage lending and financing.
If you want to be successful at mortgage broking, it is important to understand your key responsibilities.
By understanding the economic, social, and demographic aspects of the job, you will be able to do justice to your job duties and tasks. Some of them are as follows:
- Act as an intermediary between lenders and borrowers
- Meet with potential clients to understand their needs and requirements
- Evaluate the financial health and creditworthiness of individuals
- Gather relevant information such as income slips, tax documents, and credit reports
- Help clients complete the borrower applications and additional forms
- Guide clients through various stages of applying for a mortgage
- Educate clients about the various financial terms and their respective impact
- Provide specialized services to individuals, companies, banks, and businesses
- Assess the market to find the most suitable financial products for clients’ needs
- Ensure compliance with the industry rules, regulations, and state and federal laws
- Offer your best advice and sound judgment to help clients make financial decisions
- Advice clients on various post-closing procedures after securing a mortgage
- Accurately maintain financial documents and keep sales records updated
A mortgage broker juggles multiple tasks on a daily basis and your exact job duties might vary depending on your employer.
However, it should be evident that as a mortgage broker in California, you will be managing operational, administrative, and financial duties every day.
As you progress in your career and gain experience, you may be asked to oversee the working of employees, supporting staff, and entry-level mortgage brokers.
Typically, mortgage brokers work in an office environment and many also have the flexibility to work remotely from their home or any other location.
Another important aspect of your job will be collaborating with industry professionals, clients, and local or national media.