Get "The Right Chemistry" when negotiating a mortgage

By Michael G. MacKenzie, November 7, 2007
Executive Analyst, Community Acceptance Mortgage

Buying a home is one of the most important investments most couples will ever make and one that deserves special attention. Considering that you and your mortgage will be together for many years, negotiating a mortgage is a bit like proposing marriage. It behoves you to put a lot of thought into it before tying the proverbial knot.

Let's revisit the moment you fell in love. The new home had everything you wanted. It was in move-in condition, and, while slightly above your budget, it had all the amenities that you'd stipulated on you "must-have" list. You were fairly tight, and only had 10% to put down (your life savings) but the agent "found a way" and introduced you to a lender who offered you an adjustable-rate mortgage (ARM) allowing you to manage the monthly mortgage payments. As a safety net, you thought you could borrow against the rising value of your house when the new rate kicked in.

Three years have gone by and the second phase of the ARM is about to begin. You now face a much higher mortgage payment, higher property taxes and higher insurance premiums. And with house price appreciation slowing, and a baby on the way, you are starting to feel desperate.

In any situation, you deserve to be treated like the unique person that you are, with respect, patience and professionalism. Go online and punch in "low interest mortgage" and start the due diligence process. Look for a broker that gives you choices right from the beginning. If the broker appears pushy or intent on talking you into a particular type of mortgage right from the start, you should probably steer away. Your gut will tell you if the person you are evaluating is someone you want to work with for the next month or two. Ask yourself if this is someone you would feel comfortable referring to your loved ones.

Before any program can be developed, your broker needs to ask you a few questions to learn about your specific needs and wants; in short, you'll have to fully disclose your current situation. A good mortgage broker will actively listen and present you with several options that satisfy your uncovered needs. He/she will show you how much you should be saving each month, demonstrate the advantage and impact of paying down your mortgage early, and divulge the closing costs associated with each option. In the final analysis, the choice is not that of the bank, it is not that of the real estate agent and it is not that of the mortgage broker. The choice is yours.

Once you have decided which program best meets your needs, your broker should provide you with all the relevant documents and encourage you to carefully read and scrutinize the details. A good broker will be there for you, to answer any and all questions and generally, to coordinate all aspects of the loan transaction.

Countless homeowners have signed bad mortgage deals because they failed to do their due diligence and acted on the advice of less-than-ethical providers. Make sure that you benefit from the services offered by an ethical and reputable mortgage broker. Whether you are interested in saving money on your current mortgage or raising money for home improvements or your kids' education, the broker you choose can make a real difference. Indeed, when it comes to mortgage-related finance, choose the broker with whom you have "the right chemistry".

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