How to Get a Lower Mortgage Rate
September 12, 2023
CBS News MoneyWatch published an article in the last days of August 2023 noting that mortgage rates are hovering in the 7% range, with no real end in sight to the higher interest rates reported at press time.
The article lists some of the top ways you can get a lower mortgage rate, including buying discount points to reduce the rate, improving your FICO scores, and considering an adjustable rate mortgage instead of a fixed rate loan.
But at the very top of the article, number two in the CBS list? Shopping around for a lender.
Why Shop Around for an FHA Mortgage?
The rationale is simple. This is a battle to be won by inches, not miles. CBS acknowledges that you may see a lot of similarity in the rates offered to you by different lenders but also advises that every single little price break counts.
You might not think it’s a good idea to haggle over every 10th of an interest rate point, but getting the very best deal you can in this area combined with other factors such as seller concessions for closing costs and even applying for down payment assistance in combination with that slightly lower rate can help.
Little Money, Big Money
Your FHA loan, like any other mortgage, is full of little expenses that all add up to a lot more when you know the final total of your down payment, closing costs, insurance, inspections, and other costs.
Saving a little money on your home inspection, getting the seller to contribute toward your closing costs and other advantages will add up over time.
The reverse is also true. If you don’t shop around aggressively for a lender, if you don’t try to find the most affordable services, and don’t stop to consider downpayment programs in your area, you may wind up paying far more than you should have to buy your house.
Don’t Be Afraid to Ask
Some are intimidated by asking the lender for a better rate or by asking the seller to contribute toward closing costs. Getting over that intimidation is half the battle for some, but it helps to visualize the money you’ll potentially save by doing so. When those savings are less abstract, asking is easier.
How to Ask
When a loan officer tells you the rate they want to offer you, don’t let a moment go by without asking simply, “What can we do to lower that interest rate?” That is a common form of negotiating that doesn’t need an aggressive approach to be effective. The lender may give you advice, offer options, or explain that this is the best they can do.
It always pays to ask.
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The article lists some of the top ways you can get a lower mortgage rate, including buying discount points to reduce the rate, improving your FICO scores, and considering an adjustable rate mortgage instead of a fixed rate loan.
But at the very top of the article, number two in the CBS list? Shopping around for a lender.
Why Shop Around for an FHA Mortgage?
The rationale is simple. This is a battle to be won by inches, not miles. CBS acknowledges that you may see a lot of similarity in the rates offered to you by different lenders but also advises that every single little price break counts.
You might not think it’s a good idea to haggle over every 10th of an interest rate point, but getting the very best deal you can in this area combined with other factors such as seller concessions for closing costs and even applying for down payment assistance in combination with that slightly lower rate can help.
Little Money, Big Money
Your FHA loan, like any other mortgage, is full of little expenses that all add up to a lot more when you know the final total of your down payment, closing costs, insurance, inspections, and other costs.
Saving a little money on your home inspection, getting the seller to contribute toward your closing costs and other advantages will add up over time.
The reverse is also true. If you don’t shop around aggressively for a lender, if you don’t try to find the most affordable services, and don’t stop to consider downpayment programs in your area, you may wind up paying far more than you should have to buy your house.
Don’t Be Afraid to Ask
Some are intimidated by asking the lender for a better rate or by asking the seller to contribute toward closing costs. Getting over that intimidation is half the battle for some, but it helps to visualize the money you’ll potentially save by doing so. When those savings are less abstract, asking is easier.
How to Ask
When a loan officer tells you the rate they want to offer you, don’t let a moment go by without asking simply, “What can we do to lower that interest rate?” That is a common form of negotiating that doesn’t need an aggressive approach to be effective. The lender may give you advice, offer options, or explain that this is the best they can do.
It always pays to ask.
------------------------------
RELATED VIDEOS:
Show Them You're Serious By Depositing Earnest Money
Homebuyers Benefit From the Work Done by Freddie Mac
Your Second Mortgage Is a Home Equity Loan
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