If you’re thinking of putting up a commercial mortgage brokerage company, you will need to understand what it entails.
Are you contemplating to put up a commercial mortgage brokerage business? Then, you will have to prepare all the requirements. Formulate a simple and realistic business plan that will serve as your guide. It may be necessary to secure a license although this is not a requirement in some states.
Start-up costs for the commercial mortgage brokerage business vary depending on the scope and location of your enterprise. It is possible to apply for a small business loan unless you have allocated personal funds for this venture. Initial funding is needed for a small office space or work station; office equipment and supplies; insurance coverage; and, living expenses for at least one year. You can also work from home to reduce the investment amount.
There are fixed fees (federal and state governments) for licensing of commercial mortgage brokerage business. State governments charge a minimum of $300. Others impose a license fee of $450. There are states like Illinois that collect as high as $2,800 for mortgage licenses. Check out the NMLS Resource System website for more information.
The Uniform State Test (UST) was created on April 1, 2013 and adopted by some 46 state mortgage agencies. Entrepreneurs planning to go into the commercial mortgage brokerage business must consider this factor. Check with the State Administrator’s Office to find out if the UST is a pre-requisite. State governments determine the amount of surety bond. It ranges from $25, 000 to $75, 000 or even higher. This is generally between one percent and 7.5 percent of the aforementioned sum. Deductibles for each claim usually start at $1, 000 and reach as much as $25, 000.
The key is to manage your expenses. You can cut down on logistics and marketing. It is not practical to spend too much for promotions. Instead, opt for less expensive medium such as social media networking sites. Cost-effective online marketing campaigns can help the commercial mortgage brokerage business in this particular field.
Cost Reduction Strategy
See to it that that you have a very good credit score before launching a commercial mortgage brokerage business. Each step depends on your credit score. This includes the cost of insurance premiums as well as bonds. Otherwise, fix your credit score first prior to starting this endeavor.
Make sure that you engage the services of a qualified and highly regarded bonding agency. The agency with extensive experience can get the best deal especially if you intend to operate in several states. All approvals can be done online which translates to savings on time and expenses.
Last but not least the proprietor of any commercial mortgage brokerage business must always have stable financial position. In other words, your business is dependable and capable of weathering any economic challenges in the future. In this case, you will find it easy to obtain loans with lower interest rates, better terms in bond underwriting and a higher number of clients.