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When most people go to the bank to get financing for that prime piece of Sarasota real estate, they have certain things in mind that they want from the bank. First off, they want to be approved for enough money so they can get the home they want. Second, they want the least amount of hassle as possible and lastly, they want the least expensive closing costs they can get.
One thing that most prospective home buyers don´t realize is that the single most important part about a mortgage is the interest rate. The interest rate determines how much interest you´re going to pay over the life of the mortgage. Most people think that this number is carved in stone by the bank and is completely non-negotiable. And sometimes, that´s exactly the case. But other times, the bank is more than willing to listen to offers that include a lower interest rate. Let´s take a look at certain instances when a lower rate can be had.
· When it comes time to close on your home, you´ll be presented with a closing cost called "points." A point is one percent of your mortgage, and some banks ask you to pay a certain number of points up front as part of your closing costs. What does this have to do with your interest rate? Some banks are willing to trade a lower interest rate for more points paid up front. The common exchange rate is one point equals one-sixth of a percentage point in financing. If you can afford to pay as many points as possible, you can seriously lower your interest rate AND save some big time bucks over the life of your mortgage. Not every bank is open to this option and some might not even bring it up unless YOU ask. If you have the extra money, make sure you ask about lowering your interest rate by paying more points during closing.
· Most people don´t realize it, but you can shop around for the best mortgage and best interest rate for your mortgage just like you would shop around for low gas prices or lower car prices. Some banks, usually those run by large corporations do not negotiate their interest rates under any circumstances. But some banks do, and, in most cases, those are the banks you´re going to want to deal with. If the big bank in town is unwilling to budge, you can shop around and find one that actually wants your business.
· A new haven for banks that are more than happy to negotiate your interest rate are found in cyberspace. Websites like LendingTree.com and many, many others will try to get you the lowest rate possible for your mortgage. In the case of LendingTree.com, they take your financial information and get you offers from several different banks all at once so you can compare and contrast and see which bank is giving you the best offer. Before you sign on the dotted line, make sure you take a trip on the Internet to see what rates you can get.
· Finally, a great place to look for competitive rates is in the newspaper. Many banks publish the rates they are offering in their ads and you can save a ton of legwork hopping from bank to bank by simply paging through your city, state and national newspapers on a quiet Sunday morning. It will also give you an idea of which banks will be willing to negotiate their rates and which ones aren´t. Before you set foot in a bank, you should do your research first.
For most people, the world of interest rates is a complicated place. Everyone knows that the lower, the better, but most people don´t realize how just one half of one percent can translate into thousands of dollars of savings over the life of a mortgage. By doing your research and shopping around, you´re making sure that you get the best possible rate for your situation. Don´t allow yourself to be taken advantage of during your next Sarasota home mortgage. A little work up front can translate into a pocket full of money saved in the end.
GBrey | 