Buying a house is an exciting time in your life! It’s a universal sign of financial stability, and it promises opportunities of wealth in the future if you can build equity into your home and sell it for more later. Whether you’re building a home with home builders in Troy, MI, or buying one in the nearby area, congratulations on this next important step in your life!
You’ll soon find that one of the most confusing parts of the homebuying process is the mortgage. You want to get the best rates from the best mortgage services providers, but remember that you don’t have to take everything given at face value. Mortgage rates are negotiable, as long as you know what you’re doing.
Use competition to your advantage
“The mortgage industry is a very competitive space, so mortgage lenders and their representatives will always be willing to work with you to snag your business,” suggests an article from the publication The Truth About Mortgage. “…Compare mortgage rate quotes online, visit local banks, and speak to a few mortgage brokers. It’s a big deal to get a mortgage, so why stop at just one or two quotes? Negotiating is a lot easier when you’re pitting multiple lenders against one another.”
Get at least three quotes from mortgage lenders in the area. Let them know that you’re getting multiple quotes, and they’ll often present you with the best possible rates and terms up front. If you want to go with a certain lender, but they don’t offer the lowest rates, tell them what a competitor offered you and persuade them to match that rate to keep your business.
Know what to negotiate
It’s important to note that not everything is negotiable in the mortgage process. Overall, most mortgage lenders will negotiate with you as long as their commission is not affected.
“A successful mortgage rate negotiation reduces income to the lender, therefore, but never to the loan officer,” explains Gina Pogol of The Mortgage Reports. “This keeps the loan officer’s interest aligned with the customer’s, and this is good.”
Typically, your lender will have less flexibility when it comes to rates and fees, but it may differ based on the company you’re seeking funding from. To find out what the lenders’ commission is based on, give the bank’s corporate headquarters a call before heading over. Most financial institutions have a policy about being open and honest with their customers, and they’ll be all too happy to disclose this vital information to you.
Additionally, recognize when you don’t have a lot of negotiating power. For example, if your credit score is poor, the lender is not likely to be lenient with any of their fees and rates because they have to protect their own interests.
Negotiating your current mortgage
If you have an existing mortgage that you’re not happy with, you may not have to live with it forever. You can often renegotiate your mortgage so that it better reflects your current needs. It’s better to negotiate before the situation becomes dire.
“You don’t need to fall delinquent on your payments to ask for a better rate from your lender,” Jayne Thompson of SFGate HomeGuides explains. “Many banks are willing to talk with customers who are current on their mortgages because if they don’t, you potentially could fall behind in the future.”
She suggests coming up with a full, numbers-based explanation as to why you should qualify for a rate reduction. You might be able to prove that your credit score has increased recently, showing that you qualify for better rates. Or, you could prove that if you don’t get a rate reduction, you won’t be able to pay your mortgage because you recently had a salary reduction.
Negotiations can help to save you thousands, so you should make them a priority when talking with lenders.