by Fran Connors
(Portland, Oregon, USA)
Selecting a mortgage for your home could be the most important financial decision you will make. It’s an obligation you assume for many years and a small difference in any part of the negotiations can make a big difference in your monthly payments.
Mortgage lenders want your business so don’t be afraid to negotiate. Do your homework and let them know you’re shopping around for the best deal. The more you know, the better position you’re in to bargain.
It’s your money and worth the effort. Rarely are rates and terms engraved in stone in the negotiating stage. Even a quarter point better interest rate obtained can save you hundreds or even thousands of dollars in the long term.
Start by obtaining your credit reports and check them thoroughly for errors. There are three basic credit report companies and you should check them all. It’s estimated that at least 50% of credit reports contain errors. If you can’t get them corrected you could pay more for your loan or even worse be denied.
If you are one of the many millions who have to suffer bad credit it is really important you understand your financial position beforestarting to look for the right lender!.
Educate yourself on the difference types of loans. There are basically two types: conventional and government. Any mortgage other than FHA, VA or RHS (Rural Housing Service) is conventional. Decide which is best for your needs.
Mortgage rates fluctuate. Keep track of these rates by watching the Treasury Market and the overall market trends. Determine what kind of rates various lenders are offering and compare. But, look at the whole picture including fees and points. Lenders can waive certain fees but be careful they don’t waive one and tack on another.
Before you come before a lender ask yourself some questions and be honest with the answers. Ask how long you plan to stay in the home, what’s the largest monthly payment you can afford, how much is the down payment and will your income remain stable or do you expect it to be cut or increase in the near term. Also ask if the loan is assumable. This could be very important if you plan a move early on.
If you don’t want to search for a lender yourself a broker can do this for you for a fee.
Remember, he’s not obligated to find you the best deal, just a lender. Once you have a lender you’ll negotiate terms yourself. Be sure and ask how the broker will be compensated so you don’t get stuck with an unexpected expense.
When you’re satisfied and think you’ve negotiated the best possible deal, have the lender write down all costs and get a written lock-in. This will protect you from any interest rate increases while your loan is being processed which can be lengthy. If interest rates fall during the process this could work against you but most lenders will workwith you if this happens.
This may sound like a lot of work, and it’s not unlike buying a car, but if saving money is your goal it’s worth the effort. The better credit risk you are and the more they think you know the more willing lenders are to compete for your business. When they compete you win.