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Mortgage

Negotiating Your Mortgage

To get the best rates on your mortgage, you will need to know a thing or two about Negotiating Your Mortgage terms. Armed with that knowledge, you must now be able to harness your negotiating power to the utmost and get lower rates than what you were originally granted. Here are five ways to successfully negotiate a lower mortgage rate: Compare multiple mortgage rates and lenders.

– Shop around. Comparing mortgage rates is the first step to negotiating a good deal. You can save a lot of time, money, and hassle by shopping around for rates and lenders yourself.

– Check out the offers. You don’t want to sign a contract with a lender who won’t match the terms of other lenders, either. Use a mortgage lender comparison site or mortgage calculator to see who has the best deals and fees. Comparison shopping can help you save a significant amount of money.

– Be fair. Know what your financial situation is before you start comparison shopping. Do not allow a high interest rate or balloon payment to keep you from pursuing your dream of homeownership. Be fair to yourself and the lender. Make sure you fully understand all fees up front and know what you can afford. Don’t allow a high lender fee to overshadow your ability to pay your mortgage.

– Look at different types of mortgage loans. You want to compare different types of interest rates to make sure you’re not getting the best deal but a high-interest loan. Look at different types of adjustable interest rates including common adjustable rate mortgages (ARM) and fixed-rate mortgages (FRM).

– Shop around. Compare loan offers from several lenders. Understand loan terms and conditions. Know the total cost of the mortgage. You can save by negotiation. Shop around and don’t be afraid to ask questions of your potential lender.

– Negotiate with various fees. Know the lender’s terms and fees for various fees associated with negotiating your mortgage. Such fees include title and property inspections, inspection costs, private mortgage insurance premiums, borrower financing costs and administrative fees. Don’t hesitate to ask questions about such costs and ask how they affect your negotiation. In fact, it may be best to offer to pay these fees upfront in order to have a clear path during negotiations regarding your repayment period.

– Find a lender that offers a lower interest rate. A lower interest rate can reduce the overall cost of borrowing by as much as 20 percent. If you agree to a lower interest rate, go for a longer term. The longer term length will allow you to pay down your mortgage debt quicker. Negotiating your mortgage can also help you avoid the prepayment penalty.

– Be open to paying less. Most lenders will agree to negotiations only if they are absolutely certain that you will pay off your debt in full. Make sure that you budget your monthly installments and stick to them. Remember that the longer you take to repay your mortgage loans, the more you will pay in monthly installment amounts.

– Negotiate for discount points. Some lenders award points based on your credit history. Others credit based on the type of property you own and your payment history with the previous owners. You may be able to get a higher interest rate or discount points if you start negotiations early enough. In fact, some mortgage lenders may award you discount points if you start negotiations as early as two months before your scheduled loan closure.

– Consult with multiple lenders. While working directly with a single mortgage company may be convenient, working with multiple lenders allows you to negotiate a better rate and other terms. It is best to consult different lenders and compare their closing costs, payment terms and other fees. This allows you to compare the prices and benefits offered by each lender and decide on the one that will offer you the best deal.

– Work with a mortgage broker. A mortgage broker has the advantage over dealing directly with a lender. They have connections with several lenders and can help you secure better terms and rates. Mortgage brokers are also familiar with closing costs and other fees associated with taking out a mortgage. So if you plan to negotiate directly with a lender, you should seriously consider using a mortgage broker instead.