Applying for home loan: How to negotiate to get a better interest rate?

livemint.com:

planning to buy your dream home, individuals should be well versed with the home loan rates and the rules associated with them. In an email interview with Livemint, Mahesh Shukla, CEO & Founder, PayMe talked about Cibil Score, additional charges associated with a home loan, and risks associated with opting for a variable interest rate on a home loan. To achieve a better interest rate on a home loan, one should consider several strategies.

Primarily borrowers should research and compare interest rates from multiple lenders, such as banks, credit unions, and online mortgage lenders. Credit scores can be improved by paying bills on time, reducing credit card balances, and correcting errors. To reduce the loan-to-value (LTV) ratio, which can lead to a lower interest rate, paying a large down payment amount can be helpful.

Borrowers should also consider buying points, which are fees paid upfront to the lender in exchange for a lower interest rate. Availing home loans is a big decision for any individual, and in some cases, lenders may not be upfront about the different charges involved. In most cases, there is an additional processing fee which is charged by the lender for processing the loan application.

It is typically a percentage of the loan amount. Lenders often require a professional appraisal to determine the market value of the property. The borrower is usually responsible for this cost.

Also, when a borrower closes on the home loan, s/he may be required to pay the interest that accrues between the closing date and the end of the month. Other additional charges may involve, recording fees, private mortgage insurance, survey fees, credit report fees, etc. Existing home loan borrowers can switch to a different lender