How To Ask Your Mortgage Lender for a Lower Interest Rate

House object and wooden blocks with question mark stock photo
takasuu / iStock.com

You don’t have to (and shouldn’t) accept the first interest rate you receive from a mortgage lender. According to Freddie Mac research, comparing offers from at least four lenders can save you $3,000 over the life of the loan. However, buyers and refinancers typically go with the first lender they approach.

See: 9 Bills You Should Never Put on Autopay
Find: 5 Best Southern Cities To Retire on a Budget of $1,500 a Month

Whether you’re a first-time buyer or a homeowner refinancing your mortgage, here are several strategies from The Mortgage Reports to negotiate your mortgage rate.

Get Multiple Quotes

Applying with multiple lenders allows you to compare interest rates and find the best deal. Even a slightly lower rate can save you money over the life of your mortgage and The Mortgage Reports recommended comparing rates from at least three to four lenders. 

Each estimate should include the interest rate, closing costs, lender fees and other expenses like home appraisal fees, credit report fees and title insurance. The Mortgage Reports also indicated that the lowest rate may not necessarily be the cheapest once all fees and expenses have been added up.

Save for Your Future

Ask Lenders To Match Lower Interest Rate Offers

Lenders have some flexibility with the rates they offer, and having multiple quotes provides leverage when negotiating. Bring lower rate offers to lenders and ask if they match that offer or even beat it. This strategy may not always work, but it doesn’t hurt to ask.

Buy Discount Points

Another way to lower your mortgage rate is to buy discount points. According to The Mortgage Reports, one discount point typically costs 1% of the total loan amount and lowers your rate by about 0.25 percent.

MarketWatch noted that there may be limits on the number of points you can buy — and that buying points may not make sense if you don’t plan to stay in the home long-term.

Take Our Poll: Do You Have an Emergency Fund Established?
More: States Whose Economies Are Failing vs. States Whose Economies Are Thriving

Strengthen Your Loan Application

The better your financial situation, the more leverage you have to negotiate a lower interest rate. The Mortgage Reports suggested taking extra time to work on your credit score, save for a bigger down payment or lower your debt-to-income ratio by paying off some debt from credit cards or other loans.

Save for Your Future

More From GOBankingRates

Share This Article:

Save for Your Future

About the Author

Josephine Nesbit is a freelance writer specializing in real estate and personal finance. She grew up in New England but is now based out of Ohio where she attended The Ohio State University and lives with her two toddlers and fiancé. Her work has appeared in print and online publications such as Fox Business and Scotsman Guide.
Learn More

1pximage