4 Tips to Lower Your Mortgage Broker Bond Costs
#1: Address Personal Credit Discrepancies
When you apply for your mortgage broker bond, your personal credit is the first item that's reviewed to determine the bond cost. It's crucial that you pay off things such as liens, judgments, collections or past due child support. If you don't take care of these items, the surety company will view them as a negative reflection of how you conduct business, and as an increased surety credit risk. It's important to understand that a mortgage broker bond is a form of credit provided to you by the surety company, as it guarantees you'll be able to pay any claims that are filed on your bond. If you cause claims, the surety will pay them at first. However, you're ultimately responsible for bond claims.
#2: Decrease Costs with an Experienced Bond Agency
It's also important to ensure you work with an experienced and large bond agency; doing so can decrease the cost of your bond. Larger bond agencies can usually negotiate more flexible underwriting terms on behalf of mortgage brokers with bad credit, providing a higher likelihood of getting approved. A good bond agency will also provide you with larger bond limits, which is especially important for mortgage brokers who want to get bonds to operate in multiple states. Only a handful of bond agencies can approve you for mortgage broker bonds instantly online, and only a few select agencies have the ability to approve bonds in office, allowing for much faster quotes and approvals.
#3: Get Your Citizenship
If you're not already a U.S. citizen, it would be wise to become one for bonding purposes. As a non-U.S. citizen, the surety company will view you as a high surety credit risk simply because you don't have physical ties to the U.S. to ensure you'll stay to pay any bond claims that you may cause. Once you are a U.S. citizen, it shows the surety company that you're a mortgage broker that plans on operating a successful business for the long term.
#4: Strong Financials and Experience Will Lower Costs
Strong business financials are a reflection of running a profitable company, and validate your ability to pay for bond claims if they arise. Also, if you own an established and respected company with strong industry experience, it demonstrates that you know how to operate according to the law which will decrease the surety company's concern for potential bond claims. Both of these items will provide the surety company peace of mind, and as a result lower your bond pricing.
Author: Eric Weisbrot
Eric is an industry expert that specializes in taking complex surety concepts and explaining them in terms that make sense to the general public. He also manages the JW Surety Bonds website and works with various partners to help further educate the public on suretyship using various mediums.
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