When you go out for buying a new home, the first thing that pops in your mind is to look for a mortgage for buying your new home. Well, today more than 80% of home buyers seek for obtaining a mortgage for buying their dream home.
That’s all right.
But what about the mortgage rates?
Do you get the lowest mortgage rates for your new home?
Or, is it that you happily accept the interest rates thrust by your bank or financial institution?
Well, if you don’t know how to get the best possible mortgage rates, then read on as this article can be a turning point for you.
As a matter of fact, for most of the home buyers obtaining the best mortgage rates still remains a big challenge. The biggest reason for their failure in obtaining the lowest mortgage rates is that they never negotiate mortgage rate.
Yes, the truth is that you fail to negotiate mortgage rates and so get high mortgage rates for your new home.
A more astonishing truth comes your way. Most of the prospective home buyers spend more time in researching a television set than researching a mortgage.
You have to realize that buying a new home would probably be the biggest purchase in your life. With a new home, you would be joining the elite class of home owners. So, it becomes your responsibility to crack the best possible deal on your home purchase and thereby save thousands of dollars that you would have paid in the form of interest. You should make every possible effort so that you get you have the best mortgage rates for your new home.
And the road to getting best mortgage rates begins once you start negotiating for mortgage rates.
There are several factors, which contribute in getting the lowest mortgage rates. Some of the prime ones are a steady and stable job profile, a good credit rating, low debt, good bank balance, among others.
Here, we list down some of the prime mortgage negotiation tips that would greatly help you in having the best mortgage rates.
Tip #1: Spend Time in Researching
The best way to move forward in getting the lowest possible mortgage rates is through research. So once you decide that you would buy a new home, you should start devoting your time in researching for mortgage rates. Go online, or still better visit banks to find out what mortgage rates are prevailing and how you can crack the best deal on mortgage rates. If possible, visit small lending institutions that offer loans for purchasing a house. Find out the terms and conditions for buying a new home and gather information about mortgage rates.
Tip #2: Know Your Long Term Goals
It is very important to have a clear picture of your long term goals before taking up loan for your new home. It may not be a great idea to buy a new home if you have a job that demands you to be transferred to a different place altogether. So know your long term goals. A mortgage contract is at least for a five year term. So if you propose to live in the property you wish to buy for a period of at least five years then it makes sense for obtaining a mortgage.
Tip #3: Be Honest
This is perhaps the golden rule for getting the best possible mortgage rates. So be honest to the mortgage agent. Be ready to tell the truth to the mortgage agent. It will help your cause in getting the best deal for buying a new home. Enumerate your financial situation to the loan officer. Tell your income and expenditure so that he knows that it is easy or not for you to pay the installments. Tell your future plans. Chances are that after knowing these details, the loan officer would offer you a product matching your personal and financial condition.
Tip #4: Ask Questions
Asking questions help to clarify your doubts. It is always better asking questions than to remain in doubts. The loan officer knows that you are not an expert in mortgages. There may be several terms in mortgage terminology that you would not be aware. Knowing them helps you a lot in understanding the product that is being recommended to you. So don’t bother your mind and ask questions about anything pertaining to loans, or mortgages.
Tip #5: Get the Details
There is more to a loan product than just the mortgage rates. It is always in your benefit to know the details of products that are being offered to you. So get the details of product terms and conditions rather than just knowing the mortgage rates. In this context, it is important for you to know what the prepayment options available to you are. Is the mortgage that you are planning to obtain is portable or not? Is there any penalty for breaking a mortgage contract? And things like that. These details go a long way in having the best mortgage product matching your personal condition.
Tip #6: Look at the Closing Costs
Closing costs is the fees that you pay when you take out a loan. Closing costs can range from 3 to 6 percent of the loan amount. It constitutes fees that you pay in the form of application fee, appraisal fee, loan origination fee, and some other fees, as well. The best part is that you can save on the closing costs by negotiating with the lender, for what is known as the ‘seller concessions’. So if you are taking out a loan of $250,000 and you get a seller concession on closing costs of 3 percent that itself amounts to $7500 which by any standards is a big saving.
Tip #7: Create Competition
No bank or lender would like to give you a lower mortgage rate until you work for it and make efforts to get low mortgage rates. A good strategy would be to create competition among the prospective lenders. You can shop for loan with three or more financial institutions, banks, or lenders. Tell them upfront to lower the interest rates otherwise lose your business. Make every possible effort to get low mortgage rates. You can show your past loan repayment record or credit report.
Chances are that they come would come out with a lower mortgage rate quote. There is huge competition in the mortgage market and so you can take advantage of this situation and end up negotiating better terms, rates or fees. You can then quote that mortgage rate to other lender and tell them that you are getting this rate on your loan. This would create competition amongst the prospective lenders. All this can finally help you in getting the best possible mortgage rate with a bank or lender.
So you see that you can be successful in getting low or best possible mortgage rates. Following mortgage negotiating tips can help you in a big way for cracking the best deal on the mortgage rates, terms and fees on loan for your new home. It is always advisable to make every possible effort for getting low mortgage rates. As a home purchase is one of the biggest purchases of your life so make it a point to devote your time and effort in finding the best mortgage deal. The mortgage negotiating tips listed above are not exhaustive in any way but can certainly go a long way in helping you get the best rates, fees and terms on obtaining a mortgage.