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Insights into How I Reduced My Mortgage Payment by Thousands
Although it’s an exciting time, purchasing a home isn’t without its share of headaches. Obtaining a mortgage to serve as a down payment is a necessary step. This happened to my wife and I not too long ago when we relocated from Florida to Indiana.
We were picky about the mortgage lender we went with since we needed to find one that could accommodate our unusual closing conditions. Yet, we were also intent on finding the most advantageous mortgage terms. The following is the account of how my family and I were able to reduce our mortgage payment.
We Inquired About Suggestions From Our Real Estate Professional
Never having set foot in Indiana before, we weren’t sure who to go with for a mortgage. The real estate agent was consulted for advice. He suggested we go with a local mortgage firm that was more established and still operated the old-fashioned way.
We shopped around online and found that other lenders had much lower rates than what this mortgage firm was offering. Even though their interest rates could be considered steep, the organization has never been late for a loan closure. They guaranteed they would be the best fit for our specific needs.
Assorted Stores Were Perused by Us
We opted not to take our realtor’s advice at face value and do some additional research. This mortgage, after all, represents the single largest loan we’ve ever taken out.
We also got a mortgage quote from an online bank that we already do business with, in addition to the local lender. We were pleased that their interest rate was 0.25 percentage points cheaper than that of our local lender. I inquired if this was their best rate and was given a $500 closing cost credit because I had been a client before applying for the loan.
In the meantime, my in-laws were also in the market for a property and remarked that Rocket Mortgage had given them a rate that was even lower than the one our online bank had given us. We were disappointed to see that Rocket Mortgage’s rates were comparable to those offered by our online bank, and that Rocket Mortgage had greater fees.
We induced intense competition amongst lenders.
An agent from Rocket Mortgage called to follow up on our online estimate and answer any questions we might have. I let them know we were leaving Rocket Mortgage since our online bank could offer us a better package deal. I gave the agent a reading of the figures from our loan estimate, the formal document outlining your anticipated closing expenses and other loan specifics. Following that, Rocket Mortgage extended a further discount of $800 to us. Because of this, they got the greatest possible mortgage rate. After getting assurances from various lenders that they had provided me with their best offers, I doubled checked to make sure.
Once we obtained the best mortgage offer from each institution, we could evaluate the non-monetary benefits. We were concerned about the loan closing smoothly and on time. My realtor insisted that I hire a company from my area. If any issues arose, he told us, the local lender could handle them quickly and efficiently.
Yet, Rocket Mortgage and my digital bank told me that they could handle any problems just as well as a brick-and-mortar institution. Because of this, we’ve opted to move forward with Rocket Mortgage, the business that provided us with the greatest rate. After the loan was closed on time with no problems, we were relieved that we had chosen the most cost-effective option.
If you’re looking for a mortgage, here’s how to shop around and save some cash, too.
Our case demonstrates that it is possible to improve your mortgage terms through negotiation with the lender. I was able to get a rate that was 0.25 percentage points lower than the lowest offer and save hundreds of dollars in closing expenses, too.
There are a few essential expenses to weigh when comparing mortgages. A prime example is the rate of interest. How much you have to pay back each month depends on the interest rate, the principal, and the length of the loan. When all other factors are equal, it makes financial sense to seek out the lowest possible interest rate.
Closing fees are a common source of confusion. These are actual fees associated with getting a mortgage. Loan origination and closing costs vary depending on the lender. Even if two lenders provide the same interest rate, the fees they charge may be vastly different. Banks and other financial institutions may tack on various fees to your loan.
The costs associated with establishing an escrow account and the interest accrued up until the first payment are often the same from lender to lender. Pay special attention to the areas of your loan estimate labelled “Origination Charges,” “Services that Cannot be Comparison Shopped,” and “Services that Can be Comparison Shopped,” respectively. The range in price for these services might be several hundred to several thousand dollars.
You Must Raise Competition Among Lenders.
It’s simple to compare interest rates and fees among lenders after you obtain loan estimates from many different institutions. Make the most of this data to make potential lenders fight over your business. In an effort to win your business, many financial institutions will match or even beat the terms offered by their rivals.
For example, if you borrow $300,000 and get an interest rate of 3.75% instead of 4.00%, you will save almost $15,000. That’s in addition to whatever savings you can obtain by haggling for lower closing costs or lender credits.
Don’t let mortgage brokers or real estate representatives intimidate you into not comparing rates. A mortgage is likely the largest loan you will ever take out, so it’s important to shop around and compare offers before making a final selection.