August 29, 2023
Mortgage rates are hovering in the 7% range, and there’s no end in sight (at least in 2023) to the higher interest rates reported at the time of this writing. What is a borrower to do when faced with higher rates and the need to purchase a home?
There are ways you can get a lower mortgage rate, including buying discount points (used to reduce the mortgage loan rate), improving your FICO scores ahead of your loan application, and considering an adjustable rate mortgage.
But there’s another way you can get a lower rate. It’s a twofold process.
You must shop aggressively for the lender who offers you the lowest rate, and then when the lender informs you what that rate might be, ask what steps might be taken to lower that offer.
Shop Around For An FHA Mortgage Lender
When you shop around for your lender, you may see the same basic interest rates offered to you by different lenders. The variations in the rate may be small but every advantage counts. Find the lender who offers you the very best deal.
Some disagree that you should haggle over every 10th of an interest rate point. But getting the very best rate you can, combined with other savings mentioned above plus possible seller concessions for closing costs, can put you on a better financial footing no matter how small the advantage may seem at first.
Don’t Be Afraid To Ask The Lender For A Price Break
Do you feel intimidated about asking an FHA lender for a better interest rate? Do you feel hesitant to ask your seller to contribute toward closing costs?
When a loan officer shows you the going interest rates for home loans, ask the lender, “What can we do to lower that interest rate?”
The lender may offer suggestions about your FICO scores, there may be a special program you qualify for, or the lender may have options you didn’t realize existed. in some cases, the offer may be firm, but it never hurts to ask the question and get that conversation started as early as possible.
Saving Money On Your Home Loan
The FHA loan interest rate you are offered is key, but if you really want to save money on your mortgage, you’ll need to look at both the rate you are offered AND the expenses associated with your loan.
Shop around for service providers offering more competitive prices for essential services, such as a home inspection. You may also consider asking the seller to contribute toward your closing costs. These are savings that will add up over time.
These measures are designed to help you save more money on the loan and get you thinking about small victories (the cheaper inspection, the lower mortgage loan rate) that will add up to larger savings over time.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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