Yes, you CAN negotiate your mortgage rate.
In fact, almost anything can be negotiated (including the closing costs) if you know how to do it.
So, how do you do it? How do you go about negotiating a better mortgage rate?
3 Secrets to Negotiating Your Mortgage
As an aspiring homeowner, one of the most major steps of buying a home is securing an affordable mortgage rate. And to secure the best rate possible, you may have to negotiate.
With that in mind, there are things that you should do when negotiating a better mortgage rate. Armed with this information, you should be able to use your negotiating skills to the fullest and find the best mortgage rates possible.
Here are 3 secrets to a successful mortgage rate negotiation:
1. Review your credit report and determine where you stand.
Websites like FreeCreditReport.com and AnnualCreditReport.com will let you view your credit score and complete a three-bureau report for free every year. But, why is it important to check your credit report when negotiating your mortgage?
Knowing where your credit stands will give you some leverage when you talk to lenders and banks. With the knowledge of your credit score, you’ll also have a better idea of what you can actually afford, and you’ll be able to negotiate with more confidence.
2. Talk to multiple lenders and compare rates.
Some people make the mistake of getting a loan with the first lender that they talk to. They feel comfortable with them, the mortgage terms seem alright, and the interest rate is fairly competitive. But, this is the most terrible thing that you can do.
You’ll find that if you shop around and talk to multiple lenders, you can almost always get a better deal. Get an estimate from at least 3 – 4 lenders. And don’t forget to compare interest rates, closing costs, and other fees that they are charging. Most likely, you’ll notice that there’s a pretty wide variance in the loan offers.
Also, if you mention to your loan officer that you’re shopping around, they might be more inclined to give you a better rate, allowing you to better negotiate.
3. Confirm closing costs.
Closing costs can comprise a handful of payments: mortgage insurance, appraisal fees, homeowner’s insurance, attorney fees, and more. These costs can run 3% – 5% of the loan amount (and can be even higher in pricey neighborhoods).
There’s room to negotiate your closing costs, too. If the closing cost seems too high to you, ask for a list of all the fees you’re being charged. Then, check if any of them can be waived. Also, ask to see the Closing Disclosure form (a statement of final loan terms and closing costs). Compare what’s on the Closing Disclosure form to your loan estimate – if you find any discrepancies, this can be a good negotiating point, too.
Can you negotiate your mortgage rates?
The answer is a resounding YES – and more importantly – you should. Even a small adjustment in terms of interest rates can save you hundreds or even thousands of dollars over the life of your home loan.
So, keep the above mentioned tips in mind and flex your negotiating skills to secure a better deal. Good luck!