Asked by Victor  |  Submitted September 01, 2015

Any tips on negotiating a lower interest rate?

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  Answers  |  2

September 01, 2015

"Negotiating" doesn't really take place on mortgage rates. Unlike auto (and other) sales where salesmen are paid on the profitability of their transactions, lenders can only be compensated on loan size. That means they have no incentive to mark up interest rates, and, in fact, could be accused of fair lending violations if they did so.

Want the best rate you can get? Try to avoid pricing adjustments, which are Fannie Mae's risk adjustments, based on credit score, equity, and several other factors. A 760+ borrower will get the best pricing, while 25% down will get you better pricing than 20% down, etc.

Of course, there are always a range of rates available on any given loan. The lowest ones will require discount points, which are the cost of obtaining the lower rates. The higher rates will include lender credits, which help defray loan costs and keep more funds in borrowers' hands. The "best" rate for any given situation is NOT always the lowest rate...it's the rate that best fits that borrower's financial situation and goals.

Hope that helps,

Ted

$commenter.renderDisplayableName() | 02.20.17 @ 04:21

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September 01, 2015

Improve your FICO score that is an important determiner of interest rate.

$commenter.renderDisplayableName() | 02.20.17 @ 04:21

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