Mortgage Shopping 101: Negotiating

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Part 3 of a 4 part series on shopping for a mortgage focuses on negotiating your mortgage.

When it comes to grocery shopping, many people will go way out of their way to save a buck or two. But when it comes to a mortgage, many people don’t shop much at all. And the wrong deal here can waste thousands.

Earlier this year, when rates were around 5 percent, I refinanced my house at 4 and 3/4’s. The total fees that I paid were around 600 bucks. Here’s exactly how I did it…

First I went to the Internet and checked out a couple of mortgage shopping sites. I picked the four lenders offering the lowest APRs, or annual percentage rates.

Then I created a spreadsheet. I called my four lenders, confirmed their rates, then asked them in detail about fees they charge. I put it all down here.

When I was done, I requested each one email me this: it’s a good faith estimate. A more official document that confirms the rates and charges they quoted on the phone.

And now for the really fun part: I simply used my spreadsheet and the information on it, called up these lenders and pit them against each other to get the best deal.

If one lender quoted 5%, I told him another lender offered 4 and 3/4’s. If one said they charged $800 for a processing fee, I told them their competitor who wasn’t charging anything.

Once I got the best terms I felt like I could possibly get, I went ahead and did the deal… but I also looked at my settlement statement to make sure I got the stuff that I was promised.

Bottom line? Shopping for a house may be more fun than shopping for a mortgage. But if you do it right, mortgage shopping isn’t hard… and is definitely time well spent.

Stacy Johnson

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