Lower mortgage rates can save homebuyers and homeowners thousands of dollars. Negotiation and renegotiation is the key, and here is how you do it.
1. Shopping Around for Low Mortgage Rates
Shopping around isn’t limited to going from store to store to get the best price for a desired item – it’s also a way to secure the lowest mortgage rate.
You should always get personalized loan quotes from various lenders, whether you’re a soon-to-be homeowner or thinking about renegotiating your existing home loan.
Not everyone is aware that they can shop around for lower rates, and that there can be thousands of dollars to save with better rates.
Comparing quotes from various lenders before settling with an offer is essential to secure a good deal. There are several sites that specialize in quick and free loan comparison around the world, such as lanfordeg.no, focused on the Norwegian loan market.
Still, as many as 50% of all soon-to-be homeowners apply for a loan from the first mortgage lender they talk to. That means that they may end up leaving money on the table.
2. Use Lower Rates Quotes to Negotiate
While shopping around and comparing home loans helps many to find a good deal, the loan quotes can also be used for another purpose: negotiation.
You can ask a lender to match another offer with a lower mortgage rate. This strategy can give you the upper hand, as lenders will have to compete with each other to attract you as a new customer.
The same goes for additional fees and costs that will apply. Remember that a good home loan isn’t just about a low upfront mortgage rate, and that it may be possible to lower some of the other costs, like the application fee.
3. Buying Discount Points
Another way to lower your mortgage rate is with discount points. These can be earned by paying some money upfront. Normally you will get a discount point by paying 1% of the total loan amount, which in turn will lower the rate by 0,25%.
Even though it might seem little, 0,25% can save you several thousands of dollars over the life of the loan.
4. Renegotiate your Mortgage Rates
Homebuyers aren’t the only ones who should try to get a lower mortgage rate. Homeowners can drive a better deal by renegotiating with their current lender.
Record low mortgage rates presents homeowners with an opportunity to lower their monthly instalments and save thousands.
Another reason for renegotiating the rates is if your financial situation and credit score has improved since the time you took out the loan. It’s recommended to check the property’s current value through a real estate appraisal.
Get in touch with a professional appraiser, or use an online service like eiendomsmeglerfordeg.no (focuses exclusively for the Norwegian realtor market, but there are several similar portals covering North America) to find a real estate agent who can give you a home valuation. Remember that an increase in the property’s value will give you a valid reason to ask for lower interest rates.
In the case of an increase in value, you should use the real estate appraisal to receive mortgage quotes from at least three lenders, and then use the best offer to negotiate with your current lender. This can lead to lower rates as your lender doesn’t want to lose an existing customer.
Your request may be turned down, but it is definitely worth a try.