A recent article on a wide-reaching personal finance magazine plugged the benefits of rate shopping; but did it ignore some important pieces of the mortgage puzzle?
“Want to save more than $53,000 on the purchase of a home? Then be prepared to comparison shop for the best mortgage rates and terms,” a recent MoneySense article reads. “According to a new RateHub.ca survey, consumers that shopped around for the best rates saved $53,089 (based on a $500,000 mortgage, amortized over 25 years)—the difference between a lender’s posted mortgage rate and the discount rate, over a five-year term.”
According to the article, clients who shop around save an average of 2.23% by using the popular rate site, which amounts to over $50,000 for a $500,000 mortgage.
And while brokers acknowledge rate shopping helps homebuyers save on rate; it could cost them in the long-run. Something the MoneySense article fails to mention.
“I think people tend to focus on rate because it’s one of the few things they understand when it comes to getting a mortgage,” Mike Maguire, a broker with Mortgage Wise Financial told MortgageBrokerNews.ca. “Rate is not the be-all and end-all; terms matter as well.”
Those terms could include hefty penalties that cost clients thousands, Maguire said.
“What will really save clients money is finding someone who will take the time to meet with you and understand your wants and needs,” Maguire said. “My opinion is clients should deal with someone who has their best interest at heart.”
That opinion is echoed by Alyssa Richard, founder of the aforementioned RatebHub.ca.
“Online doesn’t replace the need to speak to financial experts,” she told the Ottawa Citizen, “but it does empower you.”
That message is sometimes lost, however, in the mortgage information overload from personal finance sources that often seem to focus solely on rate.