It is not uncommon these days for mortgage brokers in Georgia to look for ways to save on administrative costs and insurances, especially when opening a new business in the current economic climate. When it comes down to a surety bond for obtaining a mortgage broker license, people usually think that the high costs cannot be avoided and that the bond premium is unchangeable. It turns out there are options for reducing the surety bond price and meet successfully this requirement for your license – it is only a matter of getting enough information and using the right surety bond agency.
How is the surety bond price estimated?
The bond premium is formulated as a percentage of the surety bond amount. Usually when surety bond agencies are looking at a mortgage broker surety bond application, they need to consider a variety of factors in order to make a judgment on the financial stability of the applicant. This is due to their smaller scale of operations, which involves higher risks with every client. That is why they need to take into consideration factors like personal and business financials and professional experience, along with the personal credit score, of course. As the surety bond for your mortgage brokering business is actually a form of credit given to you, the agencies often need to assess your financial status in a comprehensive manner. That said, this cautious approach on their side often leads to higher bonding costs, even if it is only one of your stats that has been evaluated as risky.
What makes the lower price possible?
The aforementioned process may sound rather rigid and it may seem as though it is imposing a high cost on the start of your mortgage brokering business, especially if your financial and professional situation has not been perfect lately. Then comes the solution: there are possibilities to lower the amount of the surety bond premium that you would have to pay during the licensing. This is feasible only if you turn to a large scale surety bond agency because their way of operation is different, relying on strength in numbers. That is why some agencies need to consider only your personal credit score, which saves you the trouble of improving multiple factors. The only one you have to take care of is the personal credit score – and you are ready for saving on the surety bond price. You can even get an estimate online or submit your application and get a quote immediately.
The requirement to get bonded
Actually, many people are not clear on why they need such a surety bond when licensing their mortgage broker business in Georgia. As in most states, obtaining a surety bond is a legal requirement in order to get a license to operate as a mortgage broker. The surety bond is not insurance for your own business and its aim is not to protect you – there are other tools for that. Instead, it actually provides a guarantee to the state and to your clients that you will abide by the legal framework of the state. The process of licensing goes through the Georgia Department of Banking and Finance, and you still have to make your registration in the Nationwide Mortgage Licensing System (NMLS), where your Georgia application will be reviewed.
It is useful also to note that the surety bonds needed for obtaining a mortgage broker license are different from mortgage bonds. While the latter ones are investment bonds ensuring protection for investors and substantiated by real estate or other property, the former ones aim at guaranteeing that a mortgage broker will abide by the law in the state of Georgia.