Chuck, Home Buyer in 22314

I have outstanding credit.

Asked by Chuck, 22314 Fri Dec 14, 2007

How much can I negotiate the interest rate with a lender? How much can I negotiate paying fees to the lender? The lender will make money on the loan through interest, why should I have to pay for additional fees?

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Jim Cavoto, Agent, Denver, CO
Mon Dec 17, 2007
Couple things, unless your taking about a second mortgage, the Fed rate is not what dictates a mortgage rate. Mortgage rates are tied to the bond market. And while this market is effected by what the Federal Reserve does to rates, it does not dictate what the rate will be.

The best way to get the best rate is to know where rates are on the day your looking, and where they have been during the last few weeks. (Mortgage rates can change during the day because they are tied to the bond market, so if there is a change in this market, a true wholesale mortgage rate will change) You need to know this information if you truly want to get the best rates. This is because most lenders build in a point or so, just in case the rate goes up from the time they quote it to you, and when you call back and lock it. This may sound like that bank is doing you a favor, but in reality they will just make more on the yield if rates don't go up. On the other hand if rates drop during this time, the bank/ broker makes out making more yield.

All that to say research, know what the averages are in your area, remember an average means that some paid less. but at the very least you don't want to pay more.
Both of these do not make loans, but keep averages for the nation right on the home page. And both allow for research.

Fees: most fees are real, if your dealing with someone that has a good reputation, just ask what it is, and if you can see an invoice for the charge. RESPA says a lender cannot charge more than "cost" on 3rd party items, this includes credit, appraisals, title fees, even underwriting and processing. The fees that are bogus are application fee, lock fees and more than 1% origination fees (expect to pay this if your truly getting the best rate) Remember to compare APR as well as rate, this includes the fees, and is on the Truth In Lending disclosure a reputable lender will not have a problem going over this form, someone trying to hide fees will discourage you from looking to closely at this disclosure.
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Danilo Bogda…, Agent, Reston, VA
Fri Dec 14, 2007
The rates that lenders charge are not necessarily negotiable. They all work off of the Fed Funds Rate, which is set by the Federal Reserve and every bank/lender works off of that rate.

You can shop around and see what each lender charges and then compare the rates, but be very careful - you have to also compare what they're charging you to get to that rate. Some may charge you "points", which can be used to "buy down the rate" (aka lower the rate).

The fees that lenders charge vary, but there is nothing you can do to totally get rid of the fees. They have to make their money somehow much like any business/company does.
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Hojin Chang, Agent, Orlando, FL
Fri Dec 14, 2007
Typical closing costs for a conventional loan is just below 3% of the amount borrowed. You should never pay points or origination in this mortgage climate. This is particularly true is you plan on selling the home in less than five years. On average, its takes about 3 years to break even from paying pts/orig. I'm not a lender but from my experience, if you're concerned with closing costs then go directly to a bank such as Suntrust, Wells Fargo, BOA, etc. instead of a mortgage broker. They tend to treat people with great credit better and charge lower fees. Best wishes.
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Debt Free Da…, , 85260
Mon Dec 17, 2007
You can negotiate anything. You just need to check around and speak with a couple of mortgage companies to see what they are going to charge you to do a mortgage.…
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Ricardo Bueno, , Los Angeles, CA
Sat Dec 15, 2007
If you want to get the best loan (rates and terms), you need to effectively get all of your documentation in order BEFORE you start "shopping."

This way, you can pit one originator's quote against the other while you're calling/shopping around. Once you have an income and credit package prepared, you're in business... You'll have no problem getting one quote and comparing it to the next until you find one you like.

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Don Tepper, Agent, Burke, VA
Fri Dec 14, 2007
Practically, there's not much negotiating with an individual lender. What you do is go to a good mortgage broker who has access to lots of different lender's programs. There will be variations there, both in interest rates and points. That's where your advantage comes in. Also, different programs offer different advantages to different borrowers.

The broker will also know which lenders charge greater or lesser junk fees. That also depends on who you use for settlement. There are some additional fees (transfer taxes, for example) that you've got to pay. But watch out for all the $200-$500 fees. Some are legit. Some aren't. And some of those can be eliminated simply by complaining.

One other thing: Have the seller pay for as much of your closing costs as possible. That's a negotiating point, of course, and you might be able to get a lower price if you don't ask for closing cost assistance. But if your objective is to minimize those costs (versus just being irritated at lenders and the financing process), you can reduce your closing costs quite a bit.

Certain jurisdictions in Northern Virginia--Fairfax City, for instance--have special programs for people who buy property. Actually, most jurisdictions do, but some, like Fairfax City, are particularly attractive. But find a good mortgage broker and begin from there.

Good luck.
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Durenda Fach…, , Coastal Tampa Bay area. Pinellas and Pasco Counties.
Fri Dec 14, 2007
It's called the "cost of borrowing money"
By your having outstanding credit, you should qualify for some of the best terms available at the time you borrow.
Best of luck
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