Do You Know Everything You Need to Know About Your Future Mortgage?
You’re in the market for your first home and it feels like your lender has all the cards. You don’t want to pay more than you have to for a mortgage loan, but your lender gives you the idea that the rate they offer you is etched in stone. If you’re not willing to take the rate they offer, then you simply can’t get a mortgage.
But is that really the case? Are mortgage loan rates non-negotiable for first time buyers? In fact, there is room to negotiate, but you have to know the right strategies. Here’s the information you need if you’re trying to negotiate the best mortgage rate for your first home loan.
The Better Your Credit Rating, The More Negotiating Power You Have
When it comes to getting a mortgage, your credit rating is everything. Your credit rating is what mortgage lenders use to determine how great a risk you are, and therefore, what rate to offer. The higher your credit score, the more attractive you are to lenders and the more negotiating power you have.
Remember that once you lock in a mortgage rate, if your credit rating goes up a year later, it won’t help you. You’re stuck with the mortgage rate you agreed to, unless you want to go through the hassle of refinancing.
Instead of rushing to buy that first home, take the time to pay down those credit cards, make payments on time, and do whatever else it takes to bolster that credit rating. Putting off your mortgage for a few months now could mean decades of lower payments in the future.
You Can Buy a Lower Mortgage Rate
Yes, believe it or not, you can buy a lower mortgage rate. It’s called buying discount points, and all it means is that you pay a percentage of your loan up front at closing in exchange for a lower interest rate. What this essentially amounts to is paying some of your interest up front when things are more certain, so that you can enjoy lower payments down the road when you may need that extra money.
Compare Mortgage Rates to Gain Leverage
If you’re trying to get the best deal on a car, an appliance, or even a new lawnmower, you’re going to compare prices, right? After all, you understand that competition is the best way to get a lower price. Well, mortgages are no different.
If you just go to one lender, of course you are going to be tempted to take whatever they offer. If you get quotes from multiple lenders, however, then not only will you get a much better sense of what is a fair offer when it comes to a mortgage rate, but you can also bring the lowest quote to whichever lender you like best, and challenge them to do better.
Comparing Mortgage Rates Online
It’s easier than it has ever been to search for mortgage rates online, so there is no excuse for not comparing mortgage rates. For years, the lenders held all the cards; thanks to the Internet, they no longer do. By comparing rates, you take the power back in the interaction.
Buying your first home and finding the right mortgage can be intimidating, but the above steps are all easy to follow and can result in an improvement in your mortgage payments to the tune of thousands of dollars over the course of the loan. Follow these strategies to negotiate the best loan possible for you and your family.
