Why You Need a Mortgage Broker
If you're getting a mortgage, a mortgage broker is a good option to consider. There are very few instances where a mortgage broker can't save you money -- and when we're talking mortgages, saving money is key. Have you ever sat down and actually looked at how much of your annual payments goes towards your principal (versus interest)? It's incredibly depressing. That means a savings of even 0.5% interest can make a huge difference.
What is a mortgage broker?
When you go to your bank and apply for a mortgage, your bank deals with their current rates and policies. That means that even if you have friends at the bank and are dealing with good people, the best deal you can possibly get is the best deal that bank can offer.
Mortgage brokers, on the other hand, act as intermediaries between you and banks. They are not in the employ of any one bank and have immediate access to a wide variety of information. So while you would go to your bank and find the best deal that bank can offer, a mortgage broker sees the best deals from dozens of banks at once.
Contrary to what some believe, you do not have to take your mortgage through the institution where you do the majority of your banking, and there is no real advantage to doing so. If another bank will give you a lower interest rate then you should go with that bank: your brand loyalty could cost you upwards of $20,000 over the term of your mortgage if you don't.
What will it cost me?
Financially, using mortgage brokers costs absolutely nothing, at least to you -- lending institutions pay brokers. Some people worry that there are dishonest brokers out there peddling mortgages from institutions that cut them commissions. While it's true that you can find dishonest people in every profession, there are many laws in place governing how mortgage brokers operate and protecting you against any kind of fraud.
It's very rare to hear of someone having a negative experience with a mortgage broker. In addition, brokers are mortgage experts. Unlike a loan officer at a bank, who handles a wide variety of borrowing, mortgage brokers deal exclusively with mortgages and have a vast amount of information at the ready. They are much better equipped to advise you on your mortgage than a bank.
If you need your car repaired, you take it to a professional. You probably called a real estate agent to buy your house. Why not let a pro handle your mortgage as well? You really have nothing to lose by contacting a mortgage broker: after all, you can still go to the bank yourself and check things out, too!