Financing Tips

When buying a property, not only should a buyer be concerned about negotiating the best price with a seller, but there should be an equal amount of fortitude when talking with a lender. Yes, certain aspects of a mortgage can be negotiated, and in today's competitive and ever-changing lending market, smart buyers should shop and negotiate for the best deal. Sub-prime markets have all but vanished, leaving lenders eager to meet qualified clients. Your choice of lender and type of loan will not only influence your settlement costs, but cost of capital. Banks, savings and loans, mortgage companies and credit unions are all good loan sources that should be considered. After all, the money saved when negotiating a low purchase price could be lost when taking the first loan program that becomes available.

When comparing mortgages, request that each lender prepare a Truth-In-Lending Disclosure Statement. This discloses all costs associated with the loan. Of particular interest in this document is the "Annual Percentage Rate", or APR. The APR, represented in percentage form, shows the consumer how much the loan will actually cost. It not only takes into account the interest rate, but also the points (if any) the lender charges to originate the loan, mortgage broker fees and certain other fees, which may include underwriting, document service fees, processing fees and private mortgage insurance (PMI).

When comparing this figure, make sure you are comparing mortgages with similar terms (i.e. interest rate, amortization, pre-payment clause, loan-to-value ratio). This should give you a consistent baseline. If not, you will have to do the long math to determine which program is best.

Because of the present-day lending environment, many lenders are willing to negotiate certain loan terms. Soft costs are good targets. Underwriting fees, document service and appraisal fees, and the cost of a credit report may all be negotiated. A stellar credit score (the grade you are given for your past credit history) can also assist in negotiating a lower interest rate. After all, that rate is based on the mortgagor's "risk" of lending you the money.

If you purchase a home with less than a 20% down payment, have an appraisal done on the property a year or so after your purchase. With the rapid appreciation Steamboat properties have been experiencing, an 80% loan-to-value ratio may be obtainable in a reasonably short period, eliminating the PMI charge.

Buyers may be more rate sensitive these days than in the past due to how low rates have actually gone down. Reaching a high of 16.63% in 1981 and maintaining a low of 5.8% over the past three years, makes the dream of owning a vacation home more attainable now than ever.

There are many mortgage lenders and brokers in the Steamboat Springs marketplace. As your exclusive buyer broker, I will be able to match you up with a lender who would best meet your personal situation.