When you intend to apply for a mortgage, it’s usually necessary to do all you can to find the lowest mortgage rates available. In addition to doing enough research into this, it is also necessary to negotiate for lower rates as well. There are many lenders who are willing to reduce their rates by a particular margin especially if you seem committed to applying for that mortgage. Most people who do not have much experience with mortgages tend to shy away from negotiating, thinking that it would simply waste their time. However, most of the people who try it end up benefitting from reduced rates, even if the reduction is not as much as they would wish it to be.
If you are interested in doing this, you ought to remember that the success of the process will depend on the technique you use. The process of negotiation is more of an art rather than something that is done randomly. Some of the factors that will influence how successful you are when negotiating for the rates include:
Your creditworthiness
At the end of the day, a mortgage is a loan, and getting one means having to put the lender at risk. If you don’t service the loan on time, they are likely to lose a lot of money. The most obvious role of your creditworthiness in the mortgage application process is determining whether you will be eligible for the mortgage or not. People who have poor credit ratings tend to have a harder time applying for the mortgages.
However, even if you have a credit rating that can allow you to apply for the mortgage, it can also influence how successful you are when negotiating for the rates. When you have a very good credit score, you will have the upper hand when carrying out the negotiations. Not only will the lender be more receptive to this (since it shows that you are a client who is unlikely to default), but it also gives you more room to get a larger discount.
With this in mind, you should always try to find out what your credit rating it is before you apply for the mortgage. Some of the ways you can then influence it to stand a better chance of negotiating include:
Negotiate for more than one cost reduction
The costing of a mortgage usually involves many variables including the interest rate and other charges. When you are negotiating the terms of the mortgage, you could opt to address multiple costs, rather than just one aspect. For instance, you could choose to negotiate for a lower interest rate, and at the same time request for a reduction in the closing costs. The closing costs normally include the broker frees, third party fees and government fees. These, and many other fees, can be negotiated. Doing so will result in higher savings as compared to when you only focus on one cost or rate.
Keep the current property markets in mind
Before starting the negotiation process, you should have an idea of the state of the property market, and how this will affect your success. If there is a lot of competition in the market, chances are that more lenders will be willing to bend over backwards to serve you. In such settings, you will find that you will be able to push the envelope as far as negotiations are concerned. Being too modest with the negotiations in this setting will only result in you getting a much lower reduction than you could have.
Unfortunately, the property markets can be very complex for most people to fully understand, particularly if they do not have a passion for business. If you are one such person, it would be wise to consult a finance expert to give you synthesized information about the markets, and how this affects your potential for negotiation.
In summary, if you are interested in getting the lowest mortgage rates or simply want the mortgage to cost you the least amount of money, you should not shy away from negotiating. When this is done from an informed point of view, it usually goes a long way in getting you the best rates possible.
