How to Get Your Bank to Drop the Mortgage Rate
Whether you're trying to save money or facing foreclosure, asking a bank to lower your mortgage rate can reduce your monthly payment. According to the Federal Deposit Insurance Corporation, 250,000 families faced foreclosure as of 2009. Requesting a no-fee refinance or a loan modification program can help reduce mortgage payments. Banks may also have programs to help borrowers catch up on missed payments.
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Instructions
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Ask about low-fee refinance options. Many lenders offer low-fee or no-fee refinancing programs to existing customers. These refinance programs typically are streamlined, requiring minimal documentation--since the lender already has most of your information on file--and quick closing.
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Discuss loan modification programs with your lender. If you're struggling with financial hardship, you might qualify for one. This program may reduce your mortgage interest rate, with reduces monthly payments. To qualify for these programs, your debt must be 55 percent or higher of your total gross income.
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Inquire about loan modification time limits. You may be able to lower your interest rate for up to five years. Once the term expires, however, your interest rate will revert to the previous rate.
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Create a catch-up plan with your lender. In addition to negotiating a lower interest rate, you'll need to create a repayment plan if you're behind on mortgage payments. A catch-up plan is a contract that allows you to pay missed mortgage payments over a specific length of time, rather than in one lump sum. Catch-up plans are agreements, not additional loans.
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Tips & Warnings
If your loan is owned by Fannie Mae, you might qualify for the HomeSaver Advance Program. This program grants borrowers a loan to catch up on back mortgage payments. Borrowers can get up to speed over an extended period, which is less financially straining.
If you're struggling financially, contact your lender right away. It's very difficult to negotiate a lower mortgage rate once the loan is turned over to a collections agency or department.
