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Are Mortgage Rates Negotiable?

By Kevin Landis

Are mortgage rates negotiable? Find out here how you can negotiate your mortgage rate and save thousands of dollars!!

For most homeowners, a mortgage payment is the largest expense that is incurred each month.  Mortgage payments often equate to half someone’s net monthly income.  Many people believe that mortgage rates are not negotiable and that belief can cost them thousands of dollars in interest each year.  Mortgage rates are negotiable and this article discusses how to negotiate a mortgage rate.

Negotiate a Variable Rate

Most quoted rates are for fixed 30 year mortgages.  To negotiate a lower rate, a mortgage applicant can suggest a variable rate which adjusts to market rates a few years after the loan is originated.  The borrower can save thousands of dollars in interest expense the first few years of the mortgage by negotiating down the initial interest rate.  When following this strategy, the borrower needs to ensure they negotiate a interest rate cap for when the interest rate adjusts.

Negotiate Points

Another way to negotiate a mortgage rate is to negotiate points which can be used to pay down the loan.  For every 1% of the mortgage balance that a borrower pays at closing, the mortgage rate will drop between .125% and .25%.  By paying more fees, the mortgage borrower can give themselves more leverage and pay down the rate even further.

Compare Rates

Another great way to negotiate mortgage rates is to compare rates.  Most lenders will provide a potential applicant with a quick quote that takes some basic information into consideration.  After receiving multiple quotes, the mortgage applicant can use the quotes to make the lenders compete against themselves.  After they realize a better offer is available to a customer, the lender will often reduce their quoted rate and reduce the origination fees.

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5. Are Mortgage Interest Rates and Closing Costs Negotiable?