How to Negotiate an Interest Rate on a Home Loan

Educating yourself on the loan you get to finance a home is important to protect yourself from high finance fees or paying a high rate on the money you borrow. Although lenders will be constrained by their own bottom line, this is not the time to accept any deal you're offered. Examine your options carefully and challenge your lender before signing any paperwork.

Difficulty: Easy

Instructions

1. Examine the Good Faith Estimate and locate your origination and discount points. You may also see another line item for a buydown point. These are the profit motivators for the lender and directly affect what rate they offer.

2. Ask your lender to give you several scenarios with a lower rate and compare how the points on the Good Faith Estimate change. Shop around to your personal bank and mortgage brokers to compare as well.

3. Evaluate your best deal by comparing your monthly payment with your actual cost of the points and fees. After you've determined what you can live with, go back to your lender and ask if you can lower your rate even further.

4. Portray yourself as ready to walk away from the deal if they can't negotiate with you. The better your deal gets the less the lender will profit and some brokers will be more desperate to keep your loan than others.

5. Contact your original lender if you are refinancing. Your fees and costs may be lower and you can keep the same servicing. Ask to be transferred to the home retention department to apply for a loan modification if you're dissatisfied with your offers.

Resources

• Daily mortgage rates online