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How to Get a Lower Mortgage Rate

5 Quick Tips to Haggling Your Ideal Mortgage Rate

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?

 

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