So you’re thinking about purchasing a home?
While shopping for home, you’ve probably done your research and began the search for your dream house online. But, before you start looking for homes you should get in contact with either your bank or a lender other than your bank, like a mortgage broker, to find out exactly how much house you can afford.
Banks tend to have a set interest rate (based on qualifications), loan origination charges and other fees that they tack on that you must pay for closing (i call these fees just in case fees because they are added “just in case” something occurs, but rarely ever does). Other mortgage brokers may try to tack on extra fees too, just to make more money and that is why I hope homebuyers work with a real estate agent who is “aware” and not just focused on “closing the deal” to get paid.
As a Realtor I’ve seen clients put themselves in tough situations, by that I mean; they are just so excited about buying a house that they don’t pay much attention to their interest rate and other additional fees associated with getting a home loan. Many believe that whatever interest rate they get is what they have to stick with because the rate is non negotiable. They couldn’t be more WRONG! Knowledge is power and so is leverage and negotiation. If they want your business they will negotiate or waive fees, if not, try to find another lender who can give you a better rate, if possible. Make them earn your business!
In today’s market, the interest rates are at an all time low! I remember days when 6% was considered average and a good rate. Ha yea right! This is definitely the time to buy!
Today if you can get a 2.75% interest rate on a mortgage loan you are winning!!!! I had a client, who was in the process of buying a house. I tried to negotiate the rate with Bank of America but they refused. He was just another number on there wall of numbers. His rate was at 4.5% with a 725 credit score! As his agent, I was not going to settle for that! I wanted him to save as much as possible.
He also had to pay a $1100 loan origination fee, among other fees that they do not tell you about until closing (not anymore with the new HUD-1 changes). Well, I wanted the best for my client so I asked him if he could get a better rate with someone else, would he do business with them? He replied “I can get a better rate, how? And if I go somewhere else won’t it affect my credit?” My answer was “It is possible you can get a better rate, with your credit score I’m confident you can. Also we can ask the lender to do a soft pull on your credit, if you are worried about it impacting your score.” Of course he agreed.
To make a long story short, I spoke with a lender, let them know the situation and asked if they could beat his current rate with Bank of America, at 4.5%. The lender spoke with my client to get permission to pull his credit and was able to guarantee my client a rate of 3.75 percent and no origination fees! The difference lowered my clients monthly payment and will save him thousands over the long term.
So yes, in terms of negotiating your interest rate and the other fees pertaining to a loan for the purchase of a home, it can be done. If you can negotiate your rates, you can save money. Every dollar counts. Also, if you have a great realtor they will look at the numbers for you, just be aware that this is not within the scope of their job description of fiduciary responsibilities to you. Realtors are not loan officers and have nothing to do with whom you choose to get your loan from, unless you ask them for recommendations. At the end of the day, it is your choice and if your Realtor is experienced they will make the right suggestions to better serve your needs.