How to Negotiate a Good Home Loan
When you are in the market for a mortgage, you want to save as much money as possible throughout the process. By shopping around, you can often help yourself negotiate lower costs on your loan. By looking at factors such as the closing costs and the interest rate, you can potentially save money.
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Shopping Around
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Shop around with multiple lenders to gain a negotiating advantage. Check with many different lenders and get estimates. Start with local lenders. Talk to both banks and credit unions about their mortgage products and go online to shop.
Good Faith Estimates
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Get it in writing. When a mortgage lending establishment provides you with an estimate of closing costs, this is known as a good-faith estimate. It includes all the costs you would have to pay if you got a loan through the lender. The law requires the lender to give you this document within three days after your mortgage application. You can apply at as many places as you like and get good-faith estimates from all.
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Closing Costs
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Negotiate closing costs. This is the area where you can typically save the most money. Once you get your good-faith estimates, you can generally negotiate. Sit down with a loan officer and ask for justification for each of the listed closing costs. If you are not satisfied with the explanation for a particular cost, do not hesitate to request its elimination. A lender knowing you are shopping around may be willing to work with you to gain your business.
Interest Rate
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Negotiate interest rate. This is not always negotiable, but the lender may be willing, if it means getting your business. Always show lenders the quotes you received from competitors and see if any are willing to beat them. A lower interest rate is also possible if you are willing to pay more in points. Points are a type of closing costs that is essentially a buydown of your interest rate.
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