If you’re looking to secure the lowest mortgage interest rate possible, understanding the right strategies and timing can save you a significant amount of money, especially as interest rates have been on the rise since early 2022. Here are some practical steps to help you get the best rate available.
First, consider negotiating with your current lender. They already value your business and know your payment history, so they’re often willing to offer a competitive rate to keep you from switching to a competitor. For example, after discussing my situation with my lender, they reduced my rate from 3.125% to 3%.
Next, don’t hesitate to shop around. With online platforms, it’s easy to compare rates from various lenders quickly. When I used an online service, I received several competitive offers within minutes.
Also, reconnect with your previous mortgage officer. If they’ve moved to another bank, they might be able to offer you a better rate to encourage you to switch lenders.
Leverage any additional business you can bring to the bank as a bargaining chip. If you’re open to opening more accounts or using more services, let them know. Banks are keen on “sticky” customers who use multiple products, which might help you secure a better rate.
Always consider refinancing if it makes financial sense. Look at the long-term benefits versus the upfront costs. For instance, if you can break even on refinancing costs within 18 months and plan to keep your property for years, refinancing might be a wise decision.
Stay informed about the broader economic indicators, like inflation trends and monetary policy, which can impact interest rates. Sometimes, holding onto a lower fixed rate might be beneficial if inflation is rising, as it effectively reduces the real cost of your debt over time.
For those with adjustable-rate mortgages (ARMs), keep an eye on the reset periods and prevailing interest rates. If you’re approaching a reset and rates are favorable, locking in a lower rate can save you money in the long run.
Finally, understand that relationships and negotiation skills can play a significant role in securing a favorable mortgage rate. Don’t be afraid to ask for what you want and to shop around to get the best deal possible.
