When buying a new home, negotiating the mortgage interest rate is one of the most important things you must learn. If you don’t know how to negotiate, chances are you’ll end up paying high amounts. Here are some essential tips you must remember once you start discussing your mortgage rates with your lender, as compiled by WasatchPeaks.com.
Don’t Settle with One Quote
The rule of thumb when dealing with mortgages is having three to five quotes to choose from. Since asking for a quote is absolutely free, you don’t have a reason to not do this. Ask referrals from your family, friends, or business associates to know that the lender is credible.
Compare the Loans
Mortgage rates come with a GFE (Good-Faith-Estimate) outline that lets you compare up to five loans. Doing this will help you see the quotes comparatively and side by side. Some quotes may cost higher but have low interest rates, and vice versa. The GFE will give you an idea as to what the rates and fees will be.
Choose Two Final Quotes
After comparing everything, decide which two quotes are the best. Call both lenders and ask for some new quotes: low rate and high closing cost; high rate and low closing cost; medium rate and medium closing cost. After receiving the quotes from lenders, compare them again.
Negotiate with the Lenders
When finally negotiating with the two lenders, your goal is to get the best price possible. Make it clear that you are currently talking to two lenders, so they know that there’s competition. Tell them what the other lender is offering and that they need to beat that for you to finalize the application.
It all boils down to how great you are at negotiating. Don’t allow any lender to see your credit report until you chose the one to work with. This way, you can get the best quote possible.