Need quick cash for your Atlanta home? That’s what I thought this post would cover, but instead, let’s dive into how not to snag the lowest mortgage rate—a lesson I learned the hard way. Despite my experience refinancing multiple properties, I hit roadblocks due to ineffective negotiation, bad timing, and some bait-and-switch tactics.
How to Secure the Best Mortgage Rate
Initially, I believed that once we faced a rising interest rate environment, I’d be done refinancing. Yet here I am in 2022, reevaluating as the Fed hikes rates again. I ended up locking in a 10/1 ARM at 3% after much back and forth, which was decent but not the best I could have achieved.
The secret to getting the best rate is creating competition among lenders, much like how job seekers would benefit from multiple employment offers. For instance, in 2004, I wanted to purchase a house listed at $1.55 million but considered offering $1.45 million. However, during an open house, another couple seemed interested, and fearing competition, I upped my offer to $1.525 million—$75,000 more than I initially planned.
Effective Steps to a Better Mortgage Rate:
1. Get Formal Quotes: Start by collecting written quotes from several lenders. Verbal offers are unreliable. I usually use an online platform where various lenders vie for my business, providing written proposals.
2. Leverage Your Banking Relationships: Present these competitive offers to your primary bank where you hold substantial assets. Challenge them to not just match but beat these offers.
3. Offer More Assets: Banks reward customers who hold multiple accounts and significant deposits with them. The more business you bring, the better the rate offerings.
4. Be Willing to Walk Away: Don’t hesitate to move your funds to another bank if your current bank won’t match a better offer. It’s a hassle, but it’s worth it for a better rate.
Where I Went Wrong
The best rate I could have locked was a 2.75% 7/1 ARM with no costs if I transferred over $1 million to Wells Fargo. Although I was presented with this opportunity, my hesitation and delays in negotiation led to a missed chance as the offer was withdrawn amidst high demand.
Learning from Mistakes
I ended up sticking with Citibank due to convenience, despite not securing the lowest possible rate. In hindsight, I should have been more proactive and less attached to my existing bank.
Maximizing Mortgage Opportunities
If the economy turns, the $800 reduction in my monthly payment will be beneficial. Plus, knowing that others have achieved lower rates thanks to my advice offers some consolation.
Investing in Real Estate Strategically
Real estate remains my preferred investment for building wealth. It’s tangible, generally stable, and generates income. Through real estate crowdfunding platforms, I’ve diversified my investments across different markets, enhancing potential returns.
Conclusion
While my journey to refinance wasn’t as successful as I hoped, it taught valuable lessons in mortgage negotiation and the importance of acting swiftly in favorable conditions.
