When it comes to determining the long-term costs of their home loans, borrowers often have far more power than they recognize. Although the requirements for getting a loan approval are currently far more stringent than they were in years past, the mortgage loan industry is still a very competitive one. This means if you’re qualified to get a home loan, you’re more than able to negotiate for a fair interest rate.
Consider Multiple Lenders
Irvine real estate companies suggest looking for funding options from a variety of lending companies, rather than targeting just one or two lending institutions. This is often easiest to accomplish by working with a private mortgage advisor, rather than a mortgage broker. Brokers are affiliated with a small number of lending companies and therefore have a very modest number of funding products to promote. Advisors, however, will take a much broader approach to searching the home loan market and can give you access to a more expansive array of funding solutions. When lenders know that you’re simultaneously considering offers from other companies, they’re far more likely to negotiate lower interest rates.
Understand How Lower Interest Rates Are Achieved
For lenders, offering a lower interest rate simply means that they’ll be taking a lower commission on you’re loan. Thus, setting interest rates is an internal decision that is largely driven by profits, not by outside forces. You’ll have far more leverage in negotiations if you have good credit, a low debt to income ratio, plenty of assets and stable, verifiable employment. Recognize your worth as a borrower and know that interest rates are never set in stone. If a company tells you otherwise, be prepared to take your business elsewhere.
Always Collect at Least Three Quotes
Most reputable lenders do not charge consumers any fees to issue quotes. This means that you should do your due diligence and collect at least three to four quotes from different lenders before starting the comparison process. When making comparisons, you’ll find that loans fall into three basic categories in terms of their interest rates and how these relate to closing costs. These include high closing costs paired with low interest rates, low closing costs paired with high interest rates and moderate closing costs paired with medium interest rates. When negotiating with lenders, you’ll want to get both the lowest possible interest rate and the lowest possible closing costs in order to limit your upfront spending and lessen the amount that you’ll pay overall throughout the lifetime of the loan.
There are certain strategies that work well in all forms of negotiation. Knowing all of the top industry jargon is one of these. Learning these terms will give you a better understanding of how your rate was determined and which aspects of your consumer profile need to be improved. The absolute lowest rates always go to borrowers with stellar credit and reasonable down payments. Although strong negotiating skills may help you get a significant decrease in the amount of interest that lenders are willing to charge, you could find that increasing your down payment and making a few credit improvements will have a far better impact on your long-term spending.
Need help navigating the home buying process from start to finish? The first thing you want to do is find a reliable and trustworthy real estate agent to work with as you search for the perfect house or townhome for sale in Irvine. Give us a call at (714) 454-6304 and take the first step to finding the home of your dreams.