People will plan for months or even years to buy a home. They will work hard to make sure they have good credit. They'll save up enough for a big down payment. They will look for the best place to live. Then, they will take the first mortgage they can find.
Why doesn't this picture look right?
When negotiating a mortgage, it is important to remember that if you have good credit and a down payment, you are in control. You're the kind of customer that lenders would love to have. Even if your credit isn't great and you don't have a down payment, many lenders will still want to work with you.
When a lender acts like they're doing you a favour by giving you money, repeat this mantra: "I'm going to give them a lot of money." Yes, you are. Over the next five to thirty years, you will pay this lender a lot of interest and also pay back the money they gave you. You're not getting anything from them. This is a business deal, and the lender stands to make a lot of money, so you need to protect yourself and get the best deal you can.
Most lenders will try to make you think that you should be thankful to them for taking such a big risk on you, but the truth is that you should be thankful to them. A lender of mortgages can't lose. If you keep your end of the deal, they'll make a lot of money, but if you don't, they'll just take your house back and keep the interest you paid while you were waiting.
But there's a much bigger lie that lenders like to spread. They don't want you to know how much they need your money. If you look around, you'll see that this is true. If you look at all of the TV, radio, and print ads, you'll see that mortgage lenders are getting pretty competitive.
So, if you want to find the best mortgage deal for you, you have to look around. In the long run, you could save yourself a lot of money. Here are five things you can do to get the best deal:
Shop around and compare offers from different lenders. Check out both local and national lenders, as well as the Internet.
Compare terms. Interest rates vary from lender to lender, but lenders also offer different interest rates based on the terms of the mortgage. How long will it take? Will it be 15, 20, or 30 years? Will it change or stay the same?
Change some of the things that are up to you, like the type of insurance you'll have and whether or not you'll use an escrow account for your taxes, etc.
Change your down payment. Increasing the amount you're putting down can sometimes make a difference in how the lender treats you (similarly buying a less expensive house will work the same)
~ Haggle - Yes! Most of the time, lenders act as if their rates are set in stone, but this is not the case. This is a good time to do some shopping around. If you can show that another lender is giving you a slightly better deal, sometimes another lender will lower their rate to beat the other one. Hey, why not give it a shot?
Just keep in mind that you can change your future. You can decide whether or not to agree to the terms of a mortgage lender. There are many lenders out there, so you don't have to take the first offer you get.
One last hint: You might want to go through this process before you find your dream home. Most lenders will let you get preapproved for a mortgage, so you don't have to worry about losing the house of your dreams while you talk to a lender. Having a mortgage ready to go also gives you the upper hand when you are negotiating to buy your dream home when you find it.
