How to Negotiate with Mortgage Lenders

Nothing is fixed until you sign

Here is the secret the mortgage industry does not want you to know: almost every fee on the Loan Estimate is negotiable. Lenders set pricing based on what they think you will accept — not on hard costs.

What you can negotiate

• Origination fee: the single biggest lever. Ask them to reduce or waive it.
• Processing/underwriting fees: these are pure profit centers. $500–$1,000 each that cost the lender almost nothing.
• Rate: if the broker is marking up the rate (yield spread premium), ask for a lower rate.
• Points: discount points are always negotiable. Ask for the zero-point price and decide from there.
• Lender credits: ask for a credit to offset third-party costs (appraisal, title).

How to negotiate — the script

You have a Loan Estimate from Lender A. Take it to Lender B (or your broker) and say:

> "I have an offer for $X at Y%. Can you match or beat it?"

Then take Lender B's offer back to Lender A and repeat. This is called negotiation via competition, and it works better than haggling.

Specific things to say

• "Can you waive the $500 processing fee?" (They often can.)
• "Your origination fee is 1.25%. My other quote is 0.5%. Can you match that?"
• "If I pay 0 points, what is my rate?" (Some lenders default to quoting with points.)
• "Can you give me a lender credit to cover the appraisal?" (Worth asking.)

The broker advantage in negotiation

When you use a broker, you do not have to negotiate — the broker does it for you. They already have leverage because they bring volume. A broker who sends 20 loans a year to a wholesale lender has more bargaining power than you walking into a bank branch once.

What NOT to negotiate

• Third-party fees: appraisal cost, credit report, flood cert. These are pass-through costs. Negotiating them is pointless.
• Taxes and recording fees: fixed by the government.
• Title insurance: you can shop for this separately, but the lender is not the one charging it.