Mortgage rates in Ogden, Sandy, Salt Lake City, and other parts of Utah are rarely set in stone, but not all borrowers try to negotiate. Out of the people who have the guts to ask for a lower price, just a few are usually able to talk their way down to a more affordable loan.
If you want to negotiate for a more favorable mortgage rate with success, avoid the common mistakes below:
They Start the Talk Without Excellent Credit
Rule number one is never to negotiate a mortgage without having the right to do so in the first place. If you have bad credit, a lender might not have a lot of wiggle room to reduce the offer.
Having a reputation for being a risky borrower is the main reason why you are being charged more interest, allowed to borrow less, and required to pay a lot of cash up front. It is imperative to pull your credit score as high as possible before you apply for a mortgage, or else you can’t give your prospective lender to sweeten the deal for you.
They Do Not Shop Around
Smart borrowers use the competition to their advantage. They try to get as many offers as they can and capitalize on the lowest rate to compel lenders to match it.
No matter how bad you need the money, understand that many lenders also need your business bad enough to bend some rules and take less profit to get you as a customer. If you choose this route and ask the right lenders, you could get the best quotes from the most efficient ones as well as those who process a large volume of loans.
Again, you need stellar credit to pull this off. Otherwise, the power of another lender’s offer would not be as strong as you hope.
They Fail to Target the Right Fees
As you receive your Good Faith estimate, you will notice a list of fees that must be paid out of your pocket. They are called closing costs, and some of them are set by the lender, including lender service and loan origination fees.
Target such costs above all, for they are within the control of your prospective lender. If your credit is good, a reasonable lender can be open to reduce them significantly or waive them to sign you up as a customer.
However, make sure the other charges are not being inflated to make up for the ones you have negotiated successfully. Always run the numbers to ensure you will save money in the long run.
They Lock a High Interest Rate
Locking your mortgage rate forces your lender to commit to the original offer you receive no matter what happens between the day it was given to you and the day you agreed to say yes to it. When interest rates go down, though, you might no longer able to take advantage of the reduction.
Stay ahead of mortgage trends to anticipate an interest rate drop before you sign on the dotted line. But if you already have a good offer based on recent historical data, not locking is not the risk you might want to take.
Mortgage negotiation is tricky because you might not have a lot of chance to practice. Influence the factors you can control in your favor to open more doors for yourself.