Many of us know the feeling; your palms are sweating, you can feel your heart beating, the room is very quiet, and all of a sudden the loans officer breaks the silence by saying: Good news! It looks like we can approve your mortgage. You grin with delight at your good fortune and vigorously shake the loans officer's hand. Oh, the joy of being one of the privileged!
May I suggest a slightly different scenario...
The room is silent, the loans officer's hands are sweating and his heart rate is up. You break the silence by saying: Good news! I've chosen to give my mortgage to your institution. The loans officer smiles, and vigorously shakes your hand.
This is not as far fetched as it sounds. It is not only you who wants to do business with the lender, they certainly want your business as well, if you qualify. We have been programmed, or trained if you will, to simply accept the terms and conditions set out by lenders and expect all lenders to be primarily the same. Guess what? NOT TRUE!
Very simply, the advice here is to shop around. But more than that, NEGOTIATE! You are not limited to just one bank, there are a number of banks, trust companies and brokers you can contact. By negotiating, I'm not suggesting a ridiculous offer to pay an extremely low interest rate, but many lenders will reduce their rates 1/4% - 1/2%, plus offer some free services. Yes, it is possible! Just look. If you were to take 1/4% off on a $100,000.00 mortgage over 5 years = $960.00 in savings! And remember, this is after tax dollars!
Here are some other money saving financing tips:
Try Assuming A Mortgage: In early 1994, when interest rates were near an all time low, many people took out long term mortgages. Any of these homes coming on the market this year may offer you huge savings in interest over today's rates if you can assume this mortgage. This was very true in the past few years, but at this time the mortgage rates you can achieve are almost as low as in 1994.
The Appraisal: Depending on your qualifications, down payment and value of the purchase, it is possible to have all or at least part of the appraisal fee waived. Did you know that many lenders get discounts from appraisers? Make sure you get as much of this benefit as you can! You may be able to save another $50.00 - $250.00.
Make Accelerated Payments: Rather than making monthly payments, it is strongly recommended that you make bi-weekly, or even weekly payments. The savings are fantastic! With weekly payments on a $100,000.00 at 8% over 25 years you will save almost $32,000.00 over the life of the mortgage, which knocks off about five years worth of payments, and your mortgage will be paid off five years sooner!
What Else Could You Negotiate From Your Lender?
Free chequing account or safety deposit box for a year, pre-approved credit card, special package price for legal fees, appraisal, and closing costs, plus more, can be negotiated. Your business is both valuable and profitable to the lender.
Most of all, don't stress about what you get. Feel confident that what you want you can receive. Now you are ready to find the mortgage that fits your needs, and you had control over it the whole time.
