How to Negotiate Like a Pro
Buying a home is probably one of the most significant purchases you can make. After all, it’s a large investment of time, resources, and most importantly, funds. With affordability coming in at the top of the list for many prospective homeowners, getting the best deal on your mortgage has become that much more important. And the question of whether or not you get an incredible bargain often comes down to one simple thing: effective negotiation.
It’s also critical to note that the landscape of mortgage negotiation has fundamentally changed. In the age of instant information, customers have more options than ever before. This means that the scenario of heading down to THE bank and waiting for a rubber-stamp “approved” or “denied” on your mortgage application has been relegated to the past.
The vast insight we’ve gained from our mystery shop programs suggest that mortgages are more negotiable than ever. Here are a few tips to help you negotiate like a pro, so you can effectively secure the right mortgage.
Shop Smart, and Pay Attention to Details
The most important thing to remember when preparing for a negotiation is to shop around. Yes, you can walk into your usual bank and ask them to give you a good rate for staying loyal to their brand, but there’s no guarantee that tactic will work. In fact, research seems to suggest that it usually doesn’t. So feel free to get out there and see what other options are available to you. Remember, mortgage lenders want your business, so there’s an impetus for them to offer you more.
In addition, it’s easy to get caught in the rate trap, and focus on low interest as the main criteria of a good mortgage. However, the lowest rate doesn’t necessarily mean that it’s the best deal overall. Some mortgages that feature exceptionally low rates also come with stiff regulations around prepayment privileges, portability, and refinancing, in addition to penalties.
So, if you’re looking to try and pay off your mortgage as quickly as possible, choosing a lower-rate mortgage with no prepayment privileges is likely going to end up costing you more in the long run. Considering the mortgage as a whole will help ensure you’re getting the best deal overall.
Always be Prepared
Yes, that old adage still applies, even today. Before you step foot in a bank or other financial institution to apply for a mortgage, you’ll want to ensure you’ve done your research.
Know what kind of mortgage options are out there, and which of those might suit you best. Keeping these details in mind will help you make efficient use of your time when you do actually sit down to talk about the application. Also, it is worthwhile to ask questions when shopping around. It’s surprising what extra information lenders will volunteer that can help you better understand how the other side of the deal works.
When you’re at the negotiating table, it’s a good idea to have a prepared list of questions. And don’t be afraid to ask the tough ones. Ultimately, the goal is to find a mortgage that works for you, so you’ll want to highlight any potential roadblocks or aspects that don’t fit your needs as quickly as possible.
You should also be prepared to walk away. Now, this might seem a little counterintuitive, given the fact that you’re probably putting a lot of effort into your negotiations. However, given the range of mortgage options available, it’s a much smarter decision to walk away from a situation that’s simply not going to work for you.
The tips above will undoubtedly assist you in negotiating, but the most effective advice we can offer is this: Just ask for what you want.
When it comes right down to it, mortgage lenders are businesses with established products and protocols, and aren’t likely to alter their standard offering without a reason. Asking gives them that reason. And in a marketplace that has become increasingly competitive, banks want to win your business.
Asking not only increases the likelihood that you’ll get what you want, it also helps lenders get a better idea of what customers are actually looking for. And, when it comes to getting the best deal on a mortgage, that’s a win-win situation.