MORE IMPORTANT?

 PRICE OR RATE?

What do you think?? While most people will dicker for the last dollar in discount off the price of a home, it really is, equally, or more important that you dicker for the lowest interest rate on your loan! I know, it is very clear you will save $5000 if you get the seller to reduce his price by $5000, but most buyers forget to dicker equally as forcefully to get a 6% rate versus a 6.5%. Most buyers go with the very first lender who tells them they are approved. If we look at the difference interest rate and discounts make you will see which is more important. Check out this comparison:

200k @ 6.5% has payments of $1264.13 per month

195k @ 6.5% has payments of $1232.53 per month

a difference of $31.60 per month. Now look at rate difference:

200k @ 6.5% has payments of $1264.13 per month

200k @ 6% has payments of 1199.10 per month

a difference of $65.03 per month!! And this difference goes on for 360 months!!

No, I'm not saying you should forget negotiating the very lowest price you can get from the seller....BUT....do the same when negotiating with lenders for the lowest interest rate. Yes!! Interest rates are negotiatble not fixed!! That is why I strongly suggest you check with at least 3 lenders when shopping for a mortgage. The return is so much greater if you are able to reduce your interest rate for 30 years!! And in the current market, some buyers are waiting for the "bottom" on prices and not paying much attention to the low interest rates that are currently available. Over the last 12-18 months interest rates have varied by almost 1%. Be careful you do not wait for the bottom price and end up paying a higher interest rate.