Few people have negotiating skills, we are used to entering a store picking a product and paying what the price tag says. However, when it comes to properties, it is still common to bargain a little with the owner of a property during purchase conversations. It is strange then that people do not think about negotiating when talking to the home loan lender the same way they would do with a real estate agent.

Though the interest rate is not the only aspect on a home loan that can be negotiated and it is probably the hardest variable to negotiate, one should start by negotiating with the lender the interest rate and try to reduce it a point or two if possible to save a lot of money on interests in the long run. Remember that home loans usually have repayment programs of at least twenty years and thus, since they carry high amounts, a single point on the interest rate implies thousands and thousands of dollars.

Negotiating Techniques

One of the best negotiating techniques when purchasing anything is to simply state that you can not afford it or that it is just too expensive. The lender, if possible will try to keep your business if he can still make money out of your transaction and thus, he will probably make a better offer. The only problem with this technique is that the lender might offer you an extended repayment program which will imply lower monthly payments but probably the same interest rate and therefore higher costs in terms of interests due to the longer repayment program.

Another technique is to reply to an offer with a counteroffer from another lender. You really do not need to provide a written copy of the offer provided that it is reasonable so you might as well make it up. Tell the lender that another lender has offered you half a point less for the same amount and similar loan conditions. Chances are that the lender will want to improve his offer in order to keep you as a client. He might also offer you other benefits, do not hesitate and take them but insist on a reduction of the interest rate afterwards, what he has given you now he can not take it back.

As a last resort, threaten the lender to take your business somewhere else. This usually will provide you with at least a final offer from the lender. It may or may not be to your advantage but he will make his best effort to please you. Remember that the interest rate is not the only variable on the loan and you can also negotiate other conditions that can turn out useful, interesting and money saving.

Additional Negotiations

Even if your current credit does not let you negotiate with lenders that much, close on the best deal possible. And when your credit score improves you can negotiate again with the same or another lender through refinancing. Also, remember that in addition to the interest rate you can request grace periods, longer repayment programs, rescheduling of the payment dates and many other changes to loan conditions that you can benefit from.