Buyers haggle to keep costs down – but home selling price isn’t most important. For bigger savings, buyers should compare mortgages and negotiate better terms.
NEW YORK – The housing market remains competitive, and homebuyers hoping to negotiate a lower asking price might risk losing their bid.
Analysts say they should focus more effort on negotiating costs, such as those with mortgage lenders and moving companies. Major potential savings, say advisers, often come from comparison shopping and negotiating a mortgage rate.
Overall, almost three out of four (72%) prospective buyers haven’t shopped around for a mortgage that best suits their financial situation, according to a survey by Zillow Group. Yet borrowers who applied with only two different lenders reduced their mortgage rate by an average of 0.10 percentage point, according to research from Freddie Mac.
During the first 11 months of 2022 – when the average mortgage rate increased at its fastest pace in 40 years and hit a peak higher than 7% – the average mortgage rate reduction doubled to 0.20 percentage point.
And it’s not just the rate itself – mortgage fees can also be negotiated.
Common fees buyers can negotiate with their lender include origination, underwriting and loan-application fees, says Aniva Hinduja, general manager of home and mortgage at Credit Karma. Most lenders will provide an estimate of fees before submitting an application, she notes.
Meanwhile, moving companies may be more willing to negotiate than they were during the height of the pandemic-fueled housing frenzy, says Emily Irwin, senior director of advice at Wells Fargo & Co. She recommends getting quotes from at least three moving companies.
Source: Wall Street Journal (04/25/23) Dagher, Veronica
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