How to Negotiate Mortgage Fees
Fees are an inescapable part of any mortgage process. These fees help pay the lender's overhead costs and the broker's commission. In addition, third-party fees often go toward paying the vendors that the lender employs, including appraisal companies, title companies and real estate attorneys. However, in most cases, all of these fees are negotiable--regardless of what your loan officer tells you. Both you and the broker are out to make the best deal, and your priorities are different.
Other People Are Reading
Instructions
-
-
1
Apply to several mortgage lenders before committing to any one offer. If you have multiple lenders from which to choose, you can often play one offer off another, thereby giving you leverage over the loan officer. Make sure to get all mortgage offers in writing.
-
2
Request a copy of the credit report the lender used to generate your mortgage offer (including fees). Look for the positive attributes on the report. These include positive payment history on all accounts, especially secured loans like prior mortgages and cars, a lack of public records and judgments, and deep, long-term credit accounts (more than 10 years old).
-
-
3
Ask your lender(s) about discount points. These are fees you pay to reduce the amount of interest during the course of the loan. These fees can be negotiated. For example, if you wanted to lower your interest rate on a $200,000 mortgage from 5 percent to 4 percent, you could pay $2,000 (or one 'point').
-
4
Look for other positive aspects of your mortgage application. You may have held your job for more than 10 years. You may have plenty of income to cover the loan. You may have plenty of assets, such as retirement accounts. These attributes help strengthen your bargaining position.
-
5
Make a realistic counteroffer when negotiating fees. You will have to pay some fees to get a mortgage. For example, if you are being charged 1.5 percent in origination fees, ask for a 1 percent charge instead. Use your credit report and other positive aspects of your application to persuade your lender to adjust the fees.
-
6
Try to bargain for lower third-party fees like appraisal and title costs. Title insurance can be expensive. Ask your lender to reduce these costs by 50 percent. Strong-arm tactics can backfire, but threatening to take your business elsewhere will work with some brokers.
-
1
Tips & Warnings
Do not be disrespectful during negotiations. Be firm, but do not make things personal. You are simply looking out for your financial interests.
