If you’re buying an investment property, you need financing. And you may have wondered: Why would I pay a mortgage broker to find a loan when I can do it myself?
It’s a fair question.
In fact, that’s exactly how I approached financing for several years. I figured I could find a lender, compare the terms, and get the loan myself. Why pay someone else to do something I could handle on my own?
The truth is, you can get a loan yourself.
The question is whether that’s the best use of your time—and whether you have access to enough lenders to know you’re getting the best loan available for your situation.
There Are a Lot of Lenders Out There
There are thousands of lenders offering different loan products, rates, terms, and underwriting guidelines.
How big is your lending network?
Even if you’re ambitious enough to contact 50 lenders when you’re looking for a loan, there are still hundreds—or potentially thousands—you haven’t contacted.
And what if one of those lenders you didn’t know about offered a better rate or more favorable terms?
That difference could potentially save you thousands of dollars over the life of a loan.
The challenge isn’t simply finding a loan. It’s finding a loan that makes sense for your particular investment, financial situation, and goals.
A mortgage broker’s network can give you access to a much larger pool of potential lending options without requiring you to contact every lender yourself.
Your Time Has Value
There’s another cost to shopping for a loan that doesn’t show up on a loan estimate: your time.
How much time are you willing to spend searching for lenders, researching loan programs, comparing rates and terms, completing applications, answering questions, and providing documentation?
A week?
Two weeks?
Maybe more?
That’s time you’re spending trying to save money rather than actively working on your real estate business.
For a real estate investor, that distinction matters.
What could you accomplish with those same hours?
You could analyze additional properties. Talk with sellers. Meet with real estate agents. Walk potential investment properties. Manage your existing portfolio. Or potentially find and close another deal.
If working with a broker frees up enough time for you to find one additional profitable investment opportunity, the broker’s cost could become a relatively small expense compared with the potential profit from that deal.
The goal isn’t simply to save money on your loan. It’s to make better use of your time.
Brokers Do This Every Day
Finding financing is a mortgage broker’s job.
That means they spend their time developing relationships with lenders, learning about different loan programs, understanding lending guidelines, and keeping up with changes in the mortgage market.
They also become familiar with which lenders may be a good fit for different types of borrowers and properties.
An investor who shops for a loan occasionally has to start the research process over again with each new deal.
A broker is doing that research continuously.
That experience can make the financing process much more efficient.
Instead of you spending days contacting lenders and trying to figure out which programs might work, a broker can evaluate your situation and quickly identify lending options that may be a good fit.
A Better Loan Can Pay for the Broker’s Fee
Of course, there’s still the question of cost.
If a broker charges a fee for their services, you may wonder whether the expense is worth it.
One way to look at it is to compare the cost of the broker with the potential value they provide.
If a mortgage broker helps you secure a lower rate or better terms than you could find on your own, the savings over the life of the loan could potentially offset the broker’s fee. And if their work saves you significant time, that has value, too.
For example, if you spend several days searching for lenders and comparing loan programs on your own, what could you have accomplished with that time instead? Analyzing more properties? Building relationships with agents? Looking for your next deal?
That’s the real tradeoff.
So, Why Use a Mortgage Broker?
You don’t have to use a mortgage broker. You can absolutely find and obtain an investment property loan yourself.
But doing it yourself doesn’t mean it’s free. You’re paying with your time, and you’re limiting yourself to the lenders and loan programs you know about.
A mortgage broker can bring a much larger lending network and years of experience to the process while allowing you to spend your time focused on finding and evaluating investments.
If a broker helps you secure a lower interest rate, that lower rate could save you money every month and thousands of dollars over the life of the loan – which could offset the broker’s fees. Depending on the loan amount, even a relatively small difference in rate can have a significant impact on your total interest expense.
At the same time, the hours you save by not having to research lenders, compare loan programs, and submit applications can be put toward finding your next investment opportunity. If that extra time helps you find even one additional profitable deal, the value of the broker could far exceed the cost of their service.
The goal isn’t to do everything yourself. It’s to spend your time on the things that create the most value.
At One Nation Capital, we work with real estate investors to help identify financing options that fit their investment strategy and individual circumstances. If you’re evaluating your next investment property, we’re happy to help you explore your options.
Thanks for reading, and best of luck in your real estate investing journey!
-BROCK