EchoBay Expert: I don't want to be taken advantage of by my mortgage lender. What terms on home mortgage loans are negotiable?
Loyal Reader: The first step towards mortgage term negotiations is to shop around for different home mortgage loans. Lenders will be more flexible if they know that you might go to one of their competitors if they aren't willing to negotiate their terms.
As a rule, lenders generally won't negotiate their interest rates down, but it never hurts to try. If you have excellent credit and you think you deserve a better interest rate than the one you're being offered, by all means tell the lender and see if there's anything they're willing to do about it. While it may be possible to negotiate points, it's not always logical.
If you're paying points to lower your interest rate, those are going to need to stay. Aside from points and interest, there are a number of line items you might come across that are clearly negotiable. For instance, if you see a document preparation fee, try to get rid of it - tactfully of course.
Explain to the lender that you would like to keep the costs of your mortgage down and that you should not have to pay extra for the lender to prepare the documents that are needed for you to close your loan with them. If you see a charge of more than $20 for a credit report, discuss that too.
There's no reason to pay close to $100 for something that costs the lender a lot less. If the lender wants to charge you an application fee (and many do), try to negotiate it down or out of the picture altogether. Lenders should be competing for your business, not requiring you to pay to apply with them.
When you receive your good faith estimate, go over each item carefully, and if something doesn't make sense to you, bring it up with your lender and try to negotiate anything that seems unreasonable. Remember, lenders need borrowers just as much as borrowers need lenders.