I'm about to get my first mortgage loan, and I'm wondering how much negotiating...

Nojokur
Nojokur

I'm about to get my first mortgage loan, and I'm wondering how much negotiating power I have.

It'll be a fairly small loan of $115k, and I have about ~$130k between retirement, stock, and cash. I could dump it all into equity and have no debt, but I think I'd rather stay more diversified and liquid.

But BoA has been bothering me for a while trying to get me to move my stock from Schwab to Merrill Edge, and it got me thinking, how much can I leverage moving my cash around to get a better interest rate on my loan? Ie, threaten to move all my cash + investments to the bank that offers me the best rate.

Has anyone tried this type of negotiation before?

Lunatick
Lunatick

As a business owner I've found negotiating with business owners/officers is a pretty good way to wind up paying more.

I mean yeah, I'll give you a lower rate to start with but then I'm going to hit you with all kinds of fees to make it up. I'm also not going to tell you any of the ways we could save money on other aspects. And the secret is my first offer isn't really my lowest rate anyways, I save that for people I like. You may get it if you push, but if I don't like you, you can be sure I'm not going to be helping you save money. And I don't like people that threaten to take their business elsewhere.

if you can find a better deal somewhere else, do it. Don't waste my time telling me about it.

viagrandad
viagrandad

Sure, I wouldn't open with a threat. I'm already pre-approved, I'd start by seeing what rates I can get without negotiation and then play them off each other. Then I'd probably go to BoA and ask them to do better than my best offer, with moving my money from Schwab as a carrot.

None of the people I imagine I'd be talking to would have a personal stake in the outcome (unless they get a commission based on the loans?), so I doubt they'd give me a worse deal to spite me if I moved onto the stick, threatening to take all my money to the bank that offered the best rate.

It'd be a bluff anyway, unless I calculated that the amount I'd save over the life of the loan would actually be worth the hassle.

SomethingNew
SomethingNew

wind up paying more

Enjoy going bankrupt you Jewish faggot

w8t4u
w8t4u

I was in a similar situation last year. Had about ~$140K in savings. Ended up putting $25K down on a $137K house I ended up paying $127K for. Bought a boat for $40K and another ~$20K in fishing gear. And a $15K used truck. Bought some IKEA furniture and put the rest in fixing up the house.

likme
likme

diversified and liquid
buying a house

lmao what

Gigastrength
Gigastrength

I'm buying the house either way, I could have cash + stock + house, if I take the loan, which leaves me moderately diverse and liquid, or I could put all the money into the house, but have no liquidity (I'd need a loan for other large purchases) and not diverse (almost all my money in the house). Not super hard to understand.

Deadlyinx
Deadlyinx

And I don't like people that threaten to take their business elsewhere.
So you're saying you don't like free market capitalism? Go to China you fucking commie.

Methshot
Methshot

yeah jewing out on the offer can bite you in the ass later on. we repeatedly pulled this on fucks that negotiated the price of a project down hard that we did support for them very expensively. basically all additional work-hours get multiplied by or 3. they end up paying twice as much as the fair price over a few years.

Snarelure
Snarelure

however this is a special case as once they invested in a system it's hard to just drop it and invest into an other one just because a particular change request seems a bit expensive. it all ads up and as time goes by they are more and more taken hostage.

Flameblow
Flameblow

I don't understand how this is applicable to mortgage loans from a large firm. I won't need support, I'll be paying well above the minimum required payments, and I could continue to do so for years even if I lost my job with the cash I already have.

If I get a better interest rate as a result of threatening to move my cash, what could the bank do to me?

BlogWobbles
BlogWobbles

What I'm hoping it comes down to is (expected cost of loan at sub market rate) + (expected value of my cash + stocks in the bank) > 0, so the bank decides to give me a sub market loan.

(Obviously not a correct formalization, but you get the idea). It seems like a rational policy for the bank to allow negotiating like this, they'd make more money from me than if I took my best alternative.

Sir_Gallonhead
Sir_Gallonhead

I'm wondering how much negotiating power I have.
none, effectively

any lower fees/slightly better rate (talking 1/8ths of a point here) and the loan officer doesn't make money, so they aren't going to do it, and the rest of the terms are set by the investor that's going to buy the loan, ie: FHA/FNMA/freddie mac, and they don't make single loan deals

source: analyst at a mortgage bank

likme
likme


Don't put more than 20% down. Rates are so low you'll get more of a return than you spend by investing and you'll have cash for an emergency.

Schwab does home loans through Quicken Loans, so know that you are going to be working through a 3rd party. I can tell you from experience that Bank of America is not a bank you want to be doing business with. I recommend either talking to Schwab or a 3rd party. You can get a lower rate by getting a shorter time frame loan (15 years instead of 30) but really, you can't go wrong on rates right now. Keep an eye on the fees other than just the APR quote.

Regarding your stock, if you are self-directed go with Schwab. Really, it's pretty damn hard to beat their service and they don't try to hide a bunch of fees like other firms. If you use an advisor, find the one that works for you whoever they do business with.

Best of luck user.

Poker_Star
Poker_Star

So you're saying you don't like free market capitalism?
I love it.

but I also know my lower-priced competitors are cheaper for a reason. Their product and service sucks or they're breaking the law in how they operate.

so I don't mind if you want to go with the cheaper option. Actually I'd prefer it because I hate working for cheap people. But you're going to get screwed and I know it.

so don't rub their lower prices in my face. Try them and when they fail to do what you need come back and talk to me.

Playboyize
Playboyize

low-priced competitors
"My first rate isn't the lowest I can offer"

wew the backtracking

Techpill
Techpill

I can work at a loss for the next ten years if I feel like it.

I don't usually feel like it.

but yes, my prices are arbitrary. There is room for me to lower them but I won't do it just to get another customer.

because as a consumer you're only worth as much as you're willing to pay. You pay less and you're worth less to me as a customer.

SomethingNew
SomethingNew

(OP)

Stay far away from banks & credit card companies. They honestly can't compete on price or service compared to non-bank lenders, like Loan Depot & Quicken.

Have a good friend who is one of top bankers at Loan Depot, so u will see me reference them seeing as i talk to him about his loans all the time. I used to work for a lender back in the day too.

Don't worry about the "rate" look at the benefit of the loan being offered. Anybody who is only selling u only on the "rate" has no idea what they are doing (or they know exactly what they r doing & that's not really helping u). Rates can be bought down or discounted up. Until a banker/broker has looked at all of the factors including loan to value, property value, credit report, ur employment history, ur assets, etc.

On a 115k loan, you don't have much negotiating power working with bankers/brokers that get paid based on the size of ur loan. I know Loan Depot pays their bankers per loan. Loan depot services some of their own loans too which is a reason that they offer much better pricing than most.

Make one of ur first questions to ur lender, "how are you compensated when my loan closes?"

Don't get talked into having 4 companies pulling ur credit to see what they can do. Each time a different lending institution pulls ur credit it can start to bring ur score down after 1 or 2 depending on how many "hard pulls" u have on ur credit report. Also, many bankers/brokers get some type of prize for pulling the most credit reports or that is part of their pay plan. If you know that you are talking to somebody that you are comfortable with, then go ahead start moving forward but don't get bullied into giving ur credit card info for any reason. Go at ur own pace & make sure ur dealing with a reputable institution.

Lenders can also offer you a rebate to offset closing fees. Loan Depot gives away "free loans" so ask about rebates upfront. Not all companies or employees of the companies have this power tho

Illusionz
Illusionz

Having multiple hard pulls in a short period of time (two weeks, or 45 days, depending on score model) during "rate shopping" ends up being counted as just one hard pull for the purposes of credit score.

TurtleCat
TurtleCat

Are you going through a third party broker?

If not. Why not?

StonedTime
StonedTime

Bof A is in the process of paying off Billions in fines, for illegal mortgage practices ( Google it ), No one at BofA can get much lower then the rate, they quote customers, most are salary now that the Mortgage Industry devastated by Federal Over Regulation. Keep your cash ( in Silver, if I was you), rates are lower then anytime in history, in general. Loan Depot your best shot at rate/fees deal. I have securitized billions in loans, the industry has changed in the last 7 years, stay away from arrogant bankers that do not care about your business. Your cash balances and loan size will not help you, til you get to 7 figures in both, and then you will have a Private Banker at JP Morgan. Good Luck!