Negotiate!
Once you have learned what each lender has to offer, negotiate for the best deal that you can. Sometimes lenders and brokers may offer different prices for the same loan terms to different consumers, even if those consumers have the same loan qualifications. Make sure to have the lender or broker write down all the costs associated with the loan and ask if they can give better terms than the ones originally quoted or than those you have been able to find elsewhere. By law, lenders are required to give you two documents within three days of receiving your loan application: a HUD booklet entitled “Buying Your Home: Settlement Costs and Helpful Information,” and a Good Faith Estimate, which will detail a range of your settlement fees.
You can have the Good Faith Estimate reviewed by a reputable Realtor or Settlement Attorney to be sure all fees are reasonable and lawful.
If you are satisfied with the terms you have negotiated, you may want to obtain a written lock-in from the lender or broker. The lock-in should include the rate that you have agreed upon, the period the lock-in lasts, a provision to flow down your locked-in rate if interest rates decrease, and the number of points to be paid. A fee may be charged for locking in the loan rate. This fee may be refundable at closing. Lock-ins can protect you from rate increases while your loan is being processed, and automatically adjust your rate downward if interest rates fall.
Then the day before you close on your new home, ask your lender for a HUD-1 Settlement Statement (click here for a sample from the U.S. Housing and Urban Development). This document will give you a more accurate picture of your true settlement charges.
