All you want is the best mortgage product at the best possible rate, so you aren’t wasting money on paying higher interest charges then you have to on what is probably be the largest debt of your life. Is that too much to ask for?
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.
Here are a few tips on how to negotiate the best mortgage deal.
Your mortgage agent will ask you a number of questions in order to find out exactly which product will best suit your needs. Tell the truth. If you’re stretching yourself to make the monthly mortgage payments, or if you’re worried about increasing rates or moving in a few years are important details will help form your profile so the agent can recommend a product suited to your personal situation.
If you’re confused about something or you don’t fully understand some of the mortgage terminologies, don’t be afraid to ask. Only a small group of people understand all there is to know about mortgages, the rest of the world is just like you! Chances are your agent has heard the question 100 times before and they’ll have an easy to understand the answer.
Don’t just look at the mortgage rate your agent is offering, 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 will the penalty be? Are there any transfer fees?
Now, when you get to this stage, you need to have some kind of idea as to what mortgage rates are competitive in the market. Compare mortgage rates and don’t just look at the big banks, check out local credit unions, specialty lenders and mortgage brokers. Let your agent know that you know exactly what the lowest mortgage rates in the market are, and ask them to match it.
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 you’ll ruin the relationship you’re trying to build.
Ask your agent about additional offers and bonuses. 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.
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’ve just came out of bankruptcy or you have bad credit, the cards are somewhat stacked against you, then you have little room to negotiate, and very little leverage. But that doesn’t mean you can’t still try to get a good deal!