How Can I Customize My Mortgage Interest Rate?

By Stacy Williams

How can I customize my mortgage interest rate? Read this article and learn how to customize your interest rate to meet your needs!

When going through the mortgage application process, many borrowers feel that mortgage lenders are unwilling to customize interest rates. While lenders have tightened their lending restriction, there are still ways to customize your interest rate. The following steps can be taken to customize your mortgage interest rate.

Purchase Points

The first way you can customize your mortgage interest rate is to pay points. “Points” are fees which are paid at closing to pay down the mortgage interest rate. Each point costs 1% of the mortgage balance and pays down the interest rate by 0.25%. For a $200,000 mortgage, if the borrower chooses to pay 1 point, they would be charged a $2,000 fee, but their monthly payment would drop about $35 per month. Because the fee is so high, points are only recommended for people who plan to keep the mortgage for 5 or more years.

Select Different Terms

Another way you can customize your mortgage interest rate is to select a different term. Depending on the term or amortization schedule for the loan, the initial interest rate can fluctuate greatly. For example, a 30 year mortgage often comes with a higher interest rate than a 15 year mortgage. A borrower can select any amortization schedule they want which will adjust the interest rate. Also, adjustable rate mortgages can be used to customize interest rates.

Negotiate

The last way you can customize your mortgage interest rate is to negotiate. The best way to negotiate an interest rate with a lender is to acquire multiple mortgage bids from other lenders. If a lender wants to keep you as a customer, they will be willing to customize an interest rate if they fear losing your business to a competing bank.

How Can I Customize My Mortgage Interest Rate?

Related posts:

Leave a Reply