Banks often advertise mortgage interest rates, but that doesn’t mean rates are set in stone. It pays to arm yourself to negotiate for the lowest mortgage interest rate. Here’s how:
1. Gather information.
If you want the lowest mortgage interest rate, you’ll want to gather information to show why you are an excellent candidate for a mortgage. That means showing you can repay the mortgage loan without difficulty. The lowest interest rates are reserved for people with the best credit who won’t be overextending themselves with the mortgage.
Find out your credit score and understand what that means for your mortgage application. The best mortgage interest rates generally go to people with credit scores of 740 or above. But excellent mortgage rates are available to borrowers with somewhat lower scores, too. Make sure the mortgage loan officer knows about your good credit and how you accomplished such a good score.
Your quest for the lowest mortgage interest rates also includes gathering key financial data about yourself and providing it to mortgage lenders.
2. Compare loans.
Look at loan offers from different lenders and see which offers the lowest mortgage interest rates. You can compare loans by using the annual percentage rate, or APR, to understand the true annual cost of the mortgage. One way to easily compare offers is to go through a site like LendingTree, where you can receive up to four offers with a single loan request.
Now that you know the comparative costs of each loan and the interest rates, you can negotiate for the lowest mortgage interest rates. If you like the interest rate of Offer A but not the fees, point out that Offer B has lower fees and ask if Offer A can eliminate or reduce the fees. It never hurts to ask.
Likewise, if you don’t feel the mortgage interest rates properly reflect your down payment (or current equity), excellent credit and record of financial responsibility, point that out and ask for a better interest rate. If your credit rating has been dinged through no fault of your own, explain your circumstances and negotiate for the lowest interest rates possible.
4. Choose an offer.
Once you have negotiated the lowest mortgage interest rates from each lender, simply choose the one that best fits you and your needs. It may be a good idea to lock in that low interest rate.