Speaking in financial terms, a mortgage is a type of a bank loan aimed at helping the borrower to purchase a house. But most people would rather call it a financial trap that forces you to make monthly payments for the next 30 years or so which seems like forever when you are still young and have no idea what the future holds.
A mortgage is secured by the property itself, so if the borrower fails to pay it out, the bank has a right to seize and sell the house in question to recoup its losses. In other words, the stakes are high, and you must make sure you get the best deal possible when it comes to signing a mortgage. Luckily, you are not limited in your options: banks, private lenders, online lenders, credit unions, etc. All of them offer different conditions and interest rates, but it is important to know that they are not the only ones in charge.
Tip #1: Do your homework
Believe it or not, but the posted rates are not the final word. In reality, they are more flexible than you think. And the bigger the mortgage, the more your lender is likely to budge. Research mortgage rate comparison websites online to make sure you know the current average rates and don’t be afraid to use this information during the negotiations.
Tip #2: Read the small print
Most lenders lure clients in with competitively low rates only to tighten the reins on the contract. Make sure you read it A to Z, paying special attention to added clauses like penalty fee raise in the event of not closing your mortgage in a certain period of time.
Tip #3: Negotiate the extra fees
Mortgages come with a load of additional payments like legal fees, discharge fees, appraisal fees, deed fees, transfer fees, so securing lower rates will not necessarily help you save money. If you want to avoid extra fees, go with a traditional bank – they usually offer higher rates but more services.
Tip #4: Know what not to negotiate about
If you decide to break your mortgage because you want to sell your property or refinance with another lender, don’t expect an indulgent treatment. In this case, your chances to avoid paying the penalty fee are slim to none, since the lender has no incentive to negotiate with you anymore.
And the final advice: before entering negotiations, set your priorities straight and decide what you are willing to compromise on, be it rate, fees, or other services. And don’t forget: the more money you borrow, the more flexible lenders will get because they are interested in getting you as a client. Good luck in negotiations!