What Is a Mortgage Broker and Why You Need One
If you’re looking to buy a house, chances are you’re going to need to look for a mortgage. Or... you can get a mortgage broker and streamline the whole process.
You’ve probably heard the term somewhere before, but what exactly are mortgage brokers and what can they do for you?
Who are these people?
According to Investopedia, mortgage brokers are “intermediaries who brings mortgage borrowers and mortgage lenders together, but does not use its own funds to originate mortgages.” When working for you, they will pound the pavement looking for the lender that’ll give you the best rate on your mortgage.
What can they do?
By finding you the best rates for your mortgage type, you could potentially save hundreds of thousands of dollars over the lifetime of the loan. Sounds too good to be true right? It’s not.
Let’s say you want a $300,000 mortgage on a five year fixed term. The big banks will give you an interest rate of around 4.5%. A mortgage broker can get you rates 2% lower than that. Over the life of the mortgage (assuming 25-year amortization) that broker would save you just under $95,000* in interest.
*This example was calculated using the CMHC’s Mortgage Calculator*
Do you need one?
Well that all depends on you. If you think you could negotiate a better rate than what brokers are offering then all the power to you. But if you’re like me then there’s pretty much zero drawbacks to using a mortgage broker. That money you save could send kids to college, finance a few vacations, renovate your home, or just help with your retirement fund.
Find a good mortgage broker
The few drawbacks to using a mortgage broker are that they are human too and may make mistakes or may even not be trustworthy. if you’re going the broker route make sure you’re working with someone experienced and with reputation in the business.
One of the best ways to do this is to use a comparison site that will not only put you in touch with experienced brokers but show you what rates they’re offering as well.