Can you renegotiate a mortgage?

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Can you renegotiate a mortgage?

Postby consultantjournal » Sun Jun 10, 2007 4:55 pm

When we bought our new place last year, we accepted a one-year teaser rate. That rate ends soon and we can lock in at the fixed rate or go with a variable. The rates we have been quoted seem a little high. Is it possible to negotiate when the teaser rate expires? One of my students works for a bank and says yes -- although she was a bit stunned by how low our teaser rate was. (We had banks competing when we got it.) My mortgage broker didn't really answer me.

We have very good credit scores and our mortgage amount is less than we could actually qualify to borrow.

This is in Canada, if that matters.[/i]
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Postby sandycheeks » Sun Jun 10, 2007 5:07 pm

My understanding is that any renegotiation would be a refinance and bring with it associated costs.

The wording of your post makes me curious, what kind of rates are you talking about?

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Postby consultantjournal » Sun Jun 10, 2007 9:39 pm

The teaser rate was about 0.8% below the fixed rate they were offering at the time. Of course, now rates are higher, so we're looking at 1.3% more (the .8% + .5%) for fixed or .8% more for variable.
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Postby JerichoHill » Mon Jun 11, 2007 6:59 am

In my opinion this is why teaser rates are bad. You'll likely wind up paying the difference in the refinance.

I'd just lock in at whatever fixed rate you can. Try to negotiate with them but look at small banks too. Don't get a variable.
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Postby plonkee » Mon Jun 11, 2007 8:55 am

Over here, you can find out in advance how much it will cost to refinance, compared to how much you will pay in interest so you can work it out for yourself - you can even be your own mortgage broker and keep half the commission.
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Postby consultantjournal » Mon Jun 11, 2007 9:12 am

Yeah, I know teaser rates are bad when rates are rising, but everyone (including the government) thought rates were going down last year. The Canadian dollar and economy have proved stronger than expected.
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Postby tinyhands » Mon Jun 11, 2007 1:22 pm

Can the rates be negotiated? Perhaps, if the new rate isn't set/hasn't taken effect yet. If you can find a real person who will sit down and talk to you like an adult, it may very well be possible to present a case to them that would lower the rate. Negotiation relies heavily on the amount of preparation you do before sitting down to talk, as you should not expect to get something for nothing. Having a backup offer (from another lender) may be a strong position to argue, but don't discount the security of your regular payment history since you need to convince them that you can both "win" from this negotiation.

My uncle once negotiated THOUSANDS off the price of a car, but it took him 8 hours to do so. It sounds kind of crazy to spend 8 hours with a car dealer, but he calculated that he earned a couple hundred dollars per hour by doing so, more than he made at work.
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Postby consultantjournal » Mon Jun 11, 2007 1:51 pm

I've got a few months to work on this. I'll re-read the terms of my mortgage and see what it would cost to abandon the mortgage. I imagine it is a month or two of interest.
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Postby consultantjournal » Mon Jun 18, 2007 3:45 pm

As a follow up, I am looking into this. Someone mentioned that you can sometimes pay a small refinancing fee and capture a better rate.
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