When it comes to licensing a new mortgage brokering business, everybody is aware that there are some administrative steps involved, as well as considerable costs. Thus, it is important to know how and where to start from, so that the path is smoother and less cumbersome. It is also useful to see at which points there are possibilities to take shortcuts and save on the costs – read on to get to know about some of them.
How to get licensed in Texas
The main part of the licensing process passes through submitting an application form and the required documents at the Nationwide Mortgage Licensing System (NMLS). In the State of Texas, there are two relevant agencies – the Texas Department of Savings and Mortgage Lending (TDSML), which is the one you need to be in contact with, and the Office of the Consumer Credit Commissioner (OCCC), which deals with Residential Mortgage Loan Originator Licenses. Although every state has specific rules regarding the operation of mortgage brokers, the licensing is handled on the nationwide level. When you apply with the TDSML for a Mortgage Company License, you would need to pay $275 as a licensing fee, which is one of your set costs.
Texas is one of the states requiring also that the mortgage broker actually operates from a permanent physical office. This means that even if your works are conducted online, you would still need to have a working base within Texas and have your license there, so it is good to consider this beforehand.
A prerequisite for the licensing process is that the mortgage company applicant has been active in the real estate mortgage industry for three years or, alternatively, for a year and a half but also has relevant educational experience. Other requirements include personal financial statements, waiver for obtaining a credit report, as well as a $50,000 surety bond.
And now for saving: surety bonds
As it is apparent from the requirements list, the surety bond is an indispensable one if you would like to get your mortgage brokering business going. However, this is precisely the point of the licensing process where you can take a shortcut and reduce the costs by making the right choice.
If you are new to the field, you might wonder what precisely the purpose of these bonds is. Unlike insurance, a surety bond is a tool to protect your clients and the state. They guarantee that you will adhere to the laws of the state of Texas in your mortgage brokering operations. The bond is a form of credit provided by the surety company, as they are guaranteeing you. You can get bonded through a surety bond agency.
What you would have to pay is a percentage of the surety bond, which can be estimated in advance. This is the point at which you can actually lower the costs during your licensing process. Most surety bond providers look at a variety of factors in calculating the surety bond price, which include personal and business finances, professional experience, as well as your personal credit score. Saving on your mortgage broker license surety bond requirement is possible only if you turn to a large scale surety bond agency because their way of operation is more flexible, relying on strength in numbers. They need to consider only your personal credit score, which saves you the trouble of improving multiple factors. You would need to improve only your credit score, thus making the whole process considerably easier and cheaper.