What You Must Know About a Home Equity Loan
 Why
negotiation and comparison shopping is a must.
It is important to understand that you can obtain a better deal
on a home equity loan through negotiation. A home equity loan is
a product just like a car and the price is negotiable. Lenders and
brokers may offer different prices for the same home equity loan
terms to different consumers, even if those consumers have the same
loan qualifications. The most likely reason for this difference
in price is that loan officers and brokers are often allowed to
keep some or all of this difference as extra compensation.
Generally, the difference between the lowest available price for
a loan product and any higher price that the borrower agrees to
pay is an overage. When overages occur, they are built into the
prices quoted to consumers. They can occur in both fixed and variable-rate
home equity loans and can be in the form of points, fees, or the
interest rate. The quoted price of a home equity loan may contain
overages.
When you have received a loan offer, ask the lender for at least
one of the following: 1) lower the interest rate, 2) waive or reduce
one or more of its fees, 3) lower points. Make sure that the lender
is not agreeing to lower one fee while raising another or to lower
the rate while raising points. There is nothing to be lost by asking
lenders to give better terms than the original ones offered.
There is heavy competition among lenders in the home equity loan
market and you need to use this in your favor to find lenders who
are willing to give you the best deal possible. Comparison shop
and negotiate with more than one lender. Let lenders know that you
are comparison shopping to ensure that they give you their best
deal. At the very worst, comparison shopping may give you three
similar offers from three lenders. This should at least give you
comfort in knowing that you were not being taken by one unscrupulous
lender who is trying to take you and your home for a ride.
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