Once you have done your research, and compared each lender, now is the time to negotiate. Many times, loan officers and brokers, are allowed to keep some or all of the difference paid as extra compensation. Because of this, lenders and brokers may offer different prices for the same loan terms to different customers, even those with the same loan qualifications.
When negotiating your loan terms, have the lender or broker put all costs associated with the loan in writing. Then ask if the lender or broker will waive or reduce one or more if its fees, or agree to lower rates or fewer points. Be sure the lender is not raising one fee, while lowering another. If you do not ask for a better rate, the chances are you will not get one, so be sure to ask.
This is also why it is vital to shop around for a loan. Do not be afraid to play one lender against another. Make sure they understand you are looking for the best rate, and will go with the lender or broker that will provide you the best overall loan that suits your needs.
Once you have agreed to the terms of the loan, it may be best to obtain a written lock-in from the lender or broker. Make sure if you do a lock-in it contains the following:
- The rate you have agreed upon.
- The period of time the lock-in lasts.
- The number of points to be paid.
Lock-ins can protect you from future rate increases while the loan is being process. There may be a fee for locking in the loan rate. However, be sure to ask if this fee is refundable at closing, there are times when that is the case. The one drawback to locking in a rate is if the rates fall while the loan is being processed. If the rates fall, do not be afraid to go back to the negotiating table with the lender or broker to try and get the more favorable rate.