Master Negotiator: 3 Mortgage Negotiation Tips For Buying And Selling
Tuesday, February 14, 2017, 6:00 AM | Leave Comment
Most people who buy a home need a mortgage to do so, and because mortgages are such large loans with such long payback periods, it is important to get the best deal possible.
Even a tiny cut in your mortgage interest rate can mean thousands of dollars saved over the life of the loan.
Here are three mortgage negotiation tips for buying and selling.
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Keep Your Credit Score High
One of the best negotiation tips you have when trying to get a mortgage is to have a good credit score.
People with the best credit scores are the ones who get the best deals on interest rates.
The low rates that banks advertise are only available to people with the highest scores, usually above 750 on the FICO scale.
If you have a credit score that high, it gives you the ability to shop around with lenders to find the lowest rate.
To keep your credit score high, pay all your bills on time and keep your debt levels low.
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Pay Points
Discount points are upfront fees that help to lower your mortgage interest rate.
Since mortgage rates are such long-term loans, paying a little bit more up front can mean a considerable savings in the long run on your finance charges.
A point is 1 percent of your mortgage cost, so if you are borrowing $200,000 at 4 percent, it will cost you $2,000 and drop your rate to 3.75 percent.
That rate cut would lower your mortgage payment by about $30 a month, which means by about halfway through the sixth year of your mortgage you would have broken even on your upfront payment.
Over the life of your loan, that’s nearly a $9,000 interest savings.
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Pay Closing Costs
For sellers, paying some or all of the buyer’s closing costs can help them with their mortgage negotiation.
Many buyers, especially first-time ones have a hard time coming up with a down payment as well as having cash to put toward closing costs.
That can throw a wrench in their mortgage approval process. By offering to help pay those costs, you can improve the buyer’s chance of getting a mortgage and help to get your home sold.
Negotiating to get a better deal on a mortgage is a good move. Lowering the cost of your home investment makes it more valuable and can mean that you are able to gain more equity in the home you buy.
It’s not a bad idea to talk to a professional like those at Mark Fox Company to see what tips they have for negotiating a great deal on, or for, a home.
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