Mortgage Negotiation Strategy
According to the U.S. Department of Housing and Urban Development, it is important to understand all mortgage costs. Strategic mortgage negotiation can save prospective homeowners money since lenders and brokers can present different prices for the same loan to borrowers.
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Interest Rate
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The interest rate on a mortgage can vary, and it plays a major role in the amount of money you will ultimately pay. Always compare rates among various lenders and/or brokers. Don't confuse the interest rate with the annual percentage rate; the latter includes points, broker and other fees, as well as the interest rate.
Points
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Some loans include points that are lender or broker fees. Generally, the more points you pay, the lower your interest rate. Thus, paying a larger one-time fee via points can lower the amount of interest long-term. Ask for the dollar amount of the points and ask for a reduction.
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Other Fees
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There may be underwriting (loan origination), transaction, broker, settlement and closing fees. Your lender is required to give a written estimate of all fees involved so you can compare this information among lenders. All of these fees are negotiable.
Term
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Loans are available with different mortgage terms (length of the loan). A loan term of 15 or 20 years will result in higher monthly payments than a 30-year loan; however, borrowers can save considerably with a shorter term loan.
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References
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