Negotiating a great deal on your mortgage is kind of like asking your boss for a raise – you need to do a bit of homework before the meeting, go in prepared and confident, and if you’re making a fair request, you should leave happy.
Nobody wants to waste money on high-interest charges on what will probably be the largest and longest-running debt of your life. Here are a few tips on how to negotiate the best mortgage product at the best possible rate.
#1: Be honest
Your mortgage agent will ask you a number of questions in order to find out which product will fit your needs. Tell the truth. If you’re stretching yourself thin to make the monthly mortgage payments, or if you’re worried about increasing rates or moving in a few years, these are important details that will help form your profile so the agent can recommend a product best suited for your personal situation.
#2: Ask questions
If you’re confused about something or if you don’t fully understand some of the mortgage terminology, don’t be afraid to ask. Chances are your agent has heard the question 100 times before and they’ll be more than willing to provide an easier explanation.
#3: Pay attention to the details
Don’t just look at the mortgage rate your agent is offering. Look beyond the actual number and ask about the product terms and conditions. What prepayment options are available? Is the mortgage portable? What happens if you need to move or break the mortgage contract – what are the penalties? Are there any transfer fees?
#4. Challenge the mortgage rate
Now, when you get to this stage, you need to do some research and compare other competitive mortgage rates in the market. And don’t just stop at the big banks. Check out local credit unions, specialty lenders and mortgage brokers. Let your agent know about any lower rates you may have found, and depending on the product conditions, they may be willing to match it.
#5: Don’t lie
Don’t say you can get a ridiculously low rate from Joe down the street (when you know you can’t) to see if the agent will drop their rate even lower. Chances are your mortgage specialist will know you’re fibbing and this will ruin the relationship you’re trying to build.
#6: You can’t get what you don’t ask for
Ask your agent about additional offers and bonuses. Not all, but some agents will offer to pay your legal fees or appraisal fees to win your business. These small gestures can add up to hundreds of dollars in savings.
#7: Be fair
If your agent is offering to pay your legal and transfer fees, but their best rate is still 10 basis points higher than the lowest rate in the market, can you really expect them to go any lower? Likewise, if you just came out of bankruptcy or currently have bad credit, then you likely have little room to negotiate, and very little leverage. But that doesn’t mean you can’t still try to get a good deal!
No matter your situation, you should always try to negotiate. But if bartering with one agent isn’t working out for you, accept that you may need to shop around some more before finding a rate that works for you.