Are Mortgage Rates Negotiable?
By Ben Afzal
Basics
When you are considering getting a mortgage you should first get some quotes from different loan sources. These can be commercial banks, mortgage lenders, mortgage brokers, or another source with a company name you do or don t recognize.
Many big-name banks trade on their trusted reputation with their checking account and savings accounts holders that they can then overcharge borrowers on their mortgage. Getting a mortgage at your corner bank may be easy, but it isn t always the best deal in town.
When you apply for a mortgage you should receive a written “Good Faith Estimate” within three days of the application.
This form is only an estimate, not a guarantee. It will list closing costs and an interest rate.
When you collect offers from different banks make sure to compare offers made on the same day. Interest rates change every day. An offer made on Monday may be different from an offer made on Thursday only because interest rates have changed and not because one lender is better than the other.
What To Negotiate For
You shouldn t pay more than 1%-2% in closing costs for your mortgage.
You can negotiate for lower fees, a lower interest rate, or both. Generally fees and rates are related - the higher your closing fees the lower your interest rate and vice versa.
Some charges, such as processing fees, may be discretionary fees that can be negotiated down.
Do not accept an offer that has both high fees and a higher interest rate. You can call one lender to play off against another, but if you bluff with an incorrect rate or fees that are too low your lender may call your bluff.
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