Loans and mortgages – Negotiate for lower points

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Nothing is written in stone when it comes to the cost of a mortgage. With some research in hand, you can use your negotiating skills to bring down lender’s rates, points, or even fees.

The key is to arm yourself with information. Check the newspaper for current mortgage rates and points. Look online at Web sites like HSH Associates at www.hsh.com and LendingTree.com to compare rates from different lenders.

Be careful of lenders who advertise rock-bottom rates and points. They may compensate by charging outrageous fees. Let lenders know you’re shopping around so they will compete for your business by lowering their points. One point equals 1 percent of the amount of the loan. So if you convince them to take off even half a point, you can save hundreds or thousands of dollars.

If you need to choose between paying lower points or a lower interest rate, keep these things in mind.

* Choose the lower interest rate if you plan to keep the mortgage for a long time.

* Go with lower points if you plan to sell the house in a few years, since you won’t get the long-term benefit of a lower rate.

The same goes for fees. The longer you plan to keep your loan, the more fees you may want to pay upfront.

Remember to deduct any points you pay on your tax return. If you bought a house and split the points with the sellers, or even if the sellers paid for the all the points, you still get to deduct the full amount.



All the best,



Timben