$6,000 back in your pocket? Sure if you know how to play the 'origination' game

In todays dog eat dog housing market, being able to secure a lower mortgage rate can dramatically impact home affordability. Anyone buying a home even those who are current homeowners are exploring strategies to give their interest rate a haircut.

From negotiating with lenders and exploring local credit unions to understanding the nuances of rate buydowns and refinancing options, ConsumerAffairs asked a number of mortgage experts to find out the tactics and questions that can help consumers save on their mortgages, making homeownership more attainable and affordable.

Every little percentage point makes a difference

When someone is living in a dollar in / dollar out existence, shaving as little as a tenth of a point off a mortgage can give them enough money to perhapsmake a credit card payment.

For example, lets say you have a $400k mortgage at 6.00%. If you were able to knock off a tenth of a percentage point, thats nearly $30 that you could use elsewhere. If you could get the interest rate down to 5.5%, youd have about $125 a month $1,500 a year to use towards another expense or trip or major purchase. Over the course of a 30-year loan, thats $45,000.

One way to make that happen is to plop down a decent size deposit.

"Borrowers can potentially lower their mortgage rate by putting down an extra deposit, John Tarazi, director and mortgage advisor at Echo Finance Rates, told ConsumerAffairs. Doing that tends to improve the lower the loan-to-value (LTV) ratio is, and the best deals tend to kick in between 80% and 60% LTV.

The 'who'makes a big difference, too.

Shopping for a mortgage rate can make you crazy. Theres just too much research to be done, too many places to go, too many people to ask. Plus, you have to pore through every single deal to try and uncover any of the gotchas that are in the fine print. Yes, its complex. Very.

Self interests aside, Tarazi and others think that mortgage brokers have an advantage over retail lenders or big box bank in that they can access exclusive deals and help you find the best rates. Their expertise and industry connections alone can lead to significant savings and a much smoother loan process sort of like travel agents for home financing.

David Kakish, branch manager at C2 Financial Corporation, adds that on top of a mortgage brokers access to wholesale rates from multiple lenders, a good broker also has government loan expertise.

This is especially true on government loans (VA, FHA, USDA) where the difference in rate can be over 1%, he said.

Dont go with the first thing you hear

Don't settle for the first offer -- negotiate everything. Your mortgage isn't just a number; it's a battlefield, Greg Clement, CEO of Realeflow, suggests. Challenge your lender on every fee and ask for rate reductions. A determined consumer can often shave off an entire point simply by being relentless in negotiations.

Look beyond the big banks. Credit unions and local lenders often offer more competitive rates and personalized service. In an era of digital banking, consumers forget the power of community institutions that can offer rates the big guys won't match."

But, how far beyond the big banks should you go? John Aguirre, owner at John Aguirre Home Loans, thinks you shouldnt go overboard, but check at least two banks/brokers and not more than three.

Any more than three turns out to be in vain. The market keeps everyone honest in the sense that if you check at least three places, you're going to find that most every bank's rates are relatively close to one another, he said.

Question everything

"Question the fine print ruthlessly, Clement urges. Ask about hidden fees, prepayment penalties, and the specifics of rate adjustments. Many homeowners leave money on the table simply because they don't dig into the details. Knowledge isn't just power; it's savings in your pocket."

Heres a list of questions Clement and others offered that you can ask to get closer to the real truth of what your mortgage deal:

• What is my rate, and what am I paying to get it?

• How long does it typically take to close the mortgage?

• What are the direct bank fees?

• Is the rate quoted using discount points (discount point = fee to lower rate)?

• Are there any hidden fees or prepayment penalties?

• Is there an origination fee the fee a lender charges upfront to process a new loan application associated with the quote?

Expanding on that last point about origination fees, Michael Collins, CFA and founder and CEO of WinCap Financial, explained why doing that is important.

Negotiating origination fees is yet another tactic that can be used to get a better deal when it comes to a new mortgage. Some lenders may be willing to negotiate or waive origination fees, which can save you hundreds or even thousands of dollars.

Case in point: If your home loan is for $400k and the origination fee is 1.5%, thats $6,000 out of your pocket.

More to come

ConsumerAffairs will be sharing more about interest rates (like the short-term outlook) and expert mortgage loan tips you can use to your advantage. If youre shopping for a home loan, ConsumerAffairs lending team updates its findings frequently. It might be a good idea to bookmark that page and refer to it as you go through the mortgage process.