Do you want to negotiate your mortgage? Check out these tips on how to make it a great one.
1. Demonstrate quality – Ensure that you pay your mortgage on time every month for a period of at least six months. Then, arm yourself with your last six months of loan statements and show them to the home loan managers you are negotiating with: it demonstrates that you are a quality borrower, and that they will be taking on a minimal risk in offering you a better deal. Source: Your Mortgage
2. Compare the loans – The GFE’s third page has a place specifically designated to compare up to five loans. This will allow you to see all of the quotes side by side. Some may be higher costs but lower interest rate; some may be lower costs but higher interest rate. Either way it will give you an idea of what possible rates and fees are available. Source: SF Gate
3 Your creditworthiness – Long before you start mortgage-shopping, get copies of your credit reports from the three major credit-reporting agencies and a copy of your “FICO score” from Fair Isaac. The agencies collect information about your bill-paying history. Fair Isaac boils that information down to a single three-digit number that lenders use to determine your creditworthiness. You want to know what’s on the reports and clean up any errors before they reach the lenders’ eyes.
For $12.50, you can get a copy of your FICO score and Equifax credit report. You’ll also get an explanation of the FICO score and what you can do to improve it in the future.
You should also get copies of your credit reports from the other two major credit-reporting agencies, TransUnion and Experian. The cost will vary, depending on where you live and whether you’ve been turned down for credit, but shouldn’t be more than $9 apiece.
It’s highly unlikely that your credit report will be perfect. The Diva’s ” How to fix my credit report” will tell you what to do if you find mistakes on it.
Knocking down unsecured debt and building up savings will make you more creditworthy, so start now. Cut your expenses, work overtime, sell stuff you don’t need and sock away your tax refund. Putting less than 20 percent down labels you “risky,” and lenders are risk averse. They may give you a mortgage, but they’ll make you pay for private mortgage insurance (PMI) to compensate for the perceived risk. Source: Bank Rate