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Everything in real estate is negotiable," according to the industry, but right now it could be tough to put the squeeze on mortgage brokers and lenders.
That means shopping around for the best mortgage still requires time and energy.
The slip in refinancing brought on by higher rates doesn't mean lenders and brokers are wheeling and dealing any more than they did when rates were a point or so lower.
In fact, the opposite could be true.
"Lenders are only going to cut into their margins so far in any market before they just stop negotiating," said Ginny Ferguson, of CMC Heritage Valley Mortgage in Pleasanton, CA.
"With interest rates on the rise, the competition for business will be perhaps a bit more than it was when the world was fat and sassy, but as various lenders close down, consumers will be back to the supply and demand theory. The fewer lenders, the smaller the supply -- not much for consumers to negotiate with," she added.
Sacramento, CA-based Capitol Commerce Mortgage, shut its doors to offices in eight states this summer leaving hundreds of borrowers stranded.
The company, considered one of the nation's 40 largest lenders, employed hundreds and its employees aren't the only ones in the mortgage lending industry looking for jobs as the industry contracts in response to decreased mortgage refinancing.
"Capital Commerce was like a banker selling to consumers. There is no real impact," said Mike Donohoe, president of the Santa Clara County Association of Realtors in San Jose, CA.
"I think they (lenders, brokers) will live with fewer clients and adjust their business accordingly, meaning layoffs. Ultimately Fannie Mae and Freddie Mac set the market and a broker can cut a few hundred dollars off their fees, but over all that doesn't impact the market. You still have to get out there and shop around," said Donohoe, also owner-broker of Silver Creek Financial in San Jose.
Jack Guttentag, "The Mortgage Professor" from Wayne, PA argues the higher interest rate market may have given borrowers an edge -- provided they are savvy enough.
"It works only if the borrower knows how to use it, which most don't. With fewer deals coming down the pike, loan officers are going to try and earn more per deal. So the borrower who leaves himself at the mercy of the loan officer may do worse rather than better," Guttentag says.
He advises shopping around before bringing what you find to your current lender.
"Shop other lenders first, then challenge your lender to beat the best deal you find elsewhere. Your present lender may be in a position to waive some settlement costs because you are an existing customer, but you won't know if you are getting the benefit of this unless you shop elsewhere first," he suggests.
"If they know that a borrower is going to refinance regardless, they want the new loan. To get it, many lenders have what are called "retention" programs, which are designed to recapture as many as possible of those borrowers who are determined to refinance," he added.
Steve Kropper, founder of Domania Inc., a Boston firm that provides customer acquisition and retention products to banks, mortgage lenders and real estate agents, says shopping around could be an easier task for home purchase loan customers as lenders look to make up the difference from the shrinking refinance market.
The same strategy applies. Shop around, then see if your current lender will beat the deal and retain you as a customer.
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