Getting the Best Mortgage Deal That You Can

Once you know what each home mortgage lender has to offer, negotiate for the best home mortgage deal that you can. On any given day, home mortgage lenders and mortgage brokers may offer different mortgage rates and refinance rates for the same home mortgage loan terms to different consumers, even if those consumers have the same mortgage loan qualifications. The most likely reason for this difference in mortgage interest rates is that loan officers and brokers are often allowed to keep some or all of this difference as extra compensation. Generally, the difference between the lowest available mortgage rate for a home loan and any higher price that the borrower agrees to pay is an overage. When overages occur, they are built into the mortgage prices quoted to consumers. They can occur in both fixed-rate mortgage and adjustable-rate mortgage and can be in the form of points, fees, or the interest rate. Whether quoted to you by a loan officer or a broker, the home mortgage rate of any home loan may contain overages.

Have the mortgage lender or mortgage broker write down all the mortgage costs associated with the new home loan. Then ask if the mortgage lender or mortgage broker will waive or reduce one or more of its mortgage fees or agree to a lower mortgage rate or fewer points. You’ll want to make sure that the mortgage lender or mortgage broker is not agreeing to lower one mortgage fee while raising another or to lower the mortgage rate while raising points. There’s no harm in asking the mortgage lender or mortgage broker if they can give better loan terms than the original ones they quoted or than those you have found elsewhere.

Once you are satisfied with the mortgage terms you have negotiated, you may want to obtain a written lock-in from the mortgage lender or mortgage broker. The lock-in should include the mortgage interest rate that you have agreed upon, the period the lock-in lasts, and the number of mortgage points to be paid. A fee may be charged for locking in the loan rate. This fee may be refundable at closing. Lock-ins can protect you from rate increases while your loan is being processed; if rates fall, however, you could end up with a less favorable mortgage or refinance rate. If that happens, try to negotiate a compromise with the mortgage lender or mortgage broker.

Remember: Shop, Compare, Negotiate

When buying a new home, remember to shop around, to compare mortgage rates, mortgage costs and mortgage terms, and to negotiate for the best mortgage deal. Your local newspaper and the Internet are good places to start shopping for a loan. You can usually find information both on mortgage interest rates and mortgage refinance rates and points for several lenders. Since home mortgage rates and points can change daily, you’ll want to check your newspaper often when shopping for a home loan. But the newspaper does not list the fees, so be sure to ask the mortgage lenders about them.

The Mortgage Shopping Worksheet that follows may also help you. Take it with you when you speak to each mortgage lender or mortgage broker and write down the mortgage loan information you obtain. Don’t be afraid to make mortgage lenders and mortgage brokers compete with each other for your business by letting them know that you are shopping for the best mortgage deal.

Fair Lending Is Required by Law

The Equal Credit Opportunity Act prohibits home loan lenders from discriminating against credit applicants in any aspect of a credit transaction on the basis of race, color, religion, national origin, sex, marital status, age, whether all or part of the applicant’s income comes from a public assistance program, or whether the applicant has in good faith exercised a right under the Consumer Credit Protection Act.

The Fair Housing Act prohibits discrimination in residential real estate transactions on the basis of race, color, religion, sex, handicap, familial status, or national origin.

Under these laws, a consumer cannot be refused a loan based on these characteristics nor be charged more for a loan or offered less favorable terms based on such characteristics.

Credit Problems? Still Shop, Compare, and Negotiate

Don’t assume that minor credit problems or difficulties stemming from unique circumstances, such as illness or temporary loss of income, will limit your loan choices to only high-cost lenders.

If your credit report contains negative information that is accurate, but there are good reasons for trusting you to repay a home loan, be sure to explain your situation to the mortgage lender or mortgage broker. If your credit problems cannot be explained, you will probably have to pay more than borrowers who have good credit histories. But don’t assume that the only way to get credit is to pay a high price. Ask how your past credit history affects the price of your loan and what you would need to do to get a better price. Take the time to shop around and negotiate the best mortgage deal that you can.

Whether you have credit problems or not, it’s a good idea to review your credit report for accuracy and completeness before you apply for a loan. To order a copy of your credit report, visit www.annualcreditreport.com, call 877-322-8228, or contact:

Equifax: (800) 685-1111

TransUnion: (800) 916-8800

Experian: (888) 397-3742

For more helpful mortgage tips on mortgage refinancing, home loans, reverse mortgages or a home equity line of credit, contact FreeLoanComparison.com today!

Last update: November 14, 2008