How Can I get a Lower Mortgage Interest Rate?

Answer: Either Refinance or if Purchasing read below.


When you start shopping around for a mortgage loan, one of the biggest questions on your mind is: How can I get a low mortgage interest rate? Assuming you have good credit and sufficient income to qualify for a home loan (not at all a given in today’s credit crunched market!), there are several ways to go about bringing down the interest rate on your proposed mortgage loan.
Shop Around First, do not limit yourself to working with just a bank before you have checked a mortgage broker that can shop around for you

Points
Reduce the rate and if you only intend to stick with your current home and mortgage for a few years, paying points for a lower rate will not turn out to save you much money in the end. Have the seller pay those points on your behalf – see Seller Financing.

Down Payment
You can typically score a lower interest rate by providing a larger down payment. The interest rate is a representation of the risk your lender is taking on by loaning you money. The more money you pay up front, the less the lender has to lose if you default .

Seller Financing

While getting the home seller to help cover some of your costs will not get you a lower interest rate on your mortgage in and of itself, it could lower your rate by enabling you to pay some points or contribute a larger down payment. Because there are so many homes on the market, prices are falling, and homes take longer to sell these days, many sellers are desperate to strike a deal to get out of their homes. That means they may be willing to pay for you closing costs, freeing up your own savings to be used for the down payment. Sellers are allowed to credit the buyer up to a certain dollar amount in each state, and in some cases this allotment also be enough to pay for some points to buy down the interest rate.

Don’t be afraid to negotiate with both the seller and asking your agent to write it in the contract for the lowest interest rate possible!