My friend is currently over the moon because she just managed to snag what in her words is an "optimal interest rate" for her new home. She shared with me a couple of tips, which I thought were extremely helpful. For those of you looking to haggle the best rate, read on for some helpful guidance, which may very well save you thousands of dollars:
- Check the Market Rates: Do your research on what mortgage rates are like in the market right now. This way you'll have a better idea of a realistic rate to negotiate for and it'll be good ammunition to use when you're haggling. Check out Bankrate.com to look up the rates in your area.
- Use a Financial Calculator: Compare how much you'll be paying monthly to get a sense of how much you'll save with different rates. This might incentivize you to haggle for a better rate and shop around more. Bankrate has a good mortgage calculator.
- Know What Will Get You a Good Rate: The best way to get a good rate is to have a good credit score, a big down payment, and consistent employment history. This is so the lender will know that you're a low risk borrower, and will be willing to let you have a lower rate. Take all these factors into consideration and see if you can work on some of them. Give yourself some time to boost your credit score if you can.
- Comparison Shopping: Shop around! My friend did the savvy thing by approaching her bank and finding lenders through zillow.com and bankrate.com. This information will help you negotiate a better rate. Lenders are required to give you a “good faith estimate” in three days after you submit your loan application so get your GFEs in order to use it for pitting lenders against each lender.
- Haggle, Haggle, Haggle: A lower mortgage rate means that the lender will be getting less commission, so you need to find a way to convince them using the tips I just mentioned. It's never fixed so don't feel like there is a standard rate or feel bad about haggling. Remember that lender fees are also negotiable so keep that in mind, too!
Do you have more tips on getting a better rate?