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Are mortgage rates negotiable?

Yes, to some degree, mortgage interest rates are negotiable. Mortgage lenders have some flexibility when it comes to the rates they offer. However, in many cases getting a lower rate on your loan will come with a price, such as paying “points” to get a lower rate.

To get the best mortgage rate at no additional cost, consumers need to make sure their financials are in order (i.e., good credit score, high down payment, etc.) and that they know what kind of loan options they're looking for. With these elements in place, consumers can position themselves to negotiate mortgage rates by asking their lender to lower interest rate and asking for mortgage rate discounts.
At Credit Union of Southern California (CU SoCal), we make getting a mortgage loan easy!
Call 866.287.6225 today to schedule a no-obligation consultation and learn about our mortgages, home equity lines of credit, auto loans, personal loans, checking and savings accounts, and other banking products. As a full-service financial institution, we look forward to helping you with all of your banking needs.
Read on to learn more about how to negotiate mortgage rates and asking a lender to lower your interest rate.
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How to negotiate mortgage rates

Negotiating mortgage rates is something all homebuyers will do. Here are some of the most common factors you can control to get a lower interest rate:
Review your financials. Before you shop for a home, it’s smart to review your entire financial position to see if you can afford a home. Owning a home can be quite expensive when you consider taxes, insurance, and maintenance costs.
Credit score. Homebuyers with higher credit scores will be offered a lower mortgage interest rate. All mortgage lenders follow this practice. Before you shop for a mortgage, check your credit score, and do what you can to boost your score before you apply for a loan.
Down payment. According to the Consumer Financial Protection Bureau, a larger down payment means a lower interest rate, because lenders see a lower level of risk when you have more stake in the property. This means making a down payment of at least 20%, which will also mean that you don’t pay monthly Private Mortgage Insurance (PMI).
Monthly debts. Before you shop for or purchase a house, be sure to pay down as much debt as you can, especially high-interest credit card debt. Lenders will look at your debt-to-income ratio (DTI) as part of determining whether they will lend to you. If you have a high DTI, you will likely pay a higher interest rate. Lenders equate high DTI with high-risk of non-payment if you have lots of outstanding debt.
Research different mortgage options. Different loan types come with different interest rates and benefits, such as reduced closing costs. Different loan types include fixed-rate, adjustable-rate, FHA, Veterans Administration (VA), and USDA loans. Government loans provide lower rates and less fees.
Shop different lenders. Each lender will offer somewhat different rates on the same type of loan. Even a couple of percentage points can make a big difference in how high your money payment will be, so be sure to ask around.
Negotiate mortgage rate and fees with desired lender. When you’ve found the lender with a good rate and with whom you feel most comfortable doing business, you may ask for their lowest or best rate for your loan.
Check out these tips for how to save money for a house.

How are mortgage rates set?

There are two primary drivers of mortgage interest rates, external economic factors, and personal factors. Let’s take a closer look at each.
External factors. These factors are beyond individual control, as they are tied to local and world economics. This includes inflation, rate adjustments made by the Federal Reserve, world events, health of the economy, and bond prices.
Personal factors. These include your credit score, down payment, the loan-to-value ratio of the house you wish to purchase, and type of home (such as second home, investment property, mobile home, and condominium). Negotiating mortgage rates is easier when you are in a strong financial position.

Other ways to save money on your mortgage

Even with the interest rate environment on the upswing, there are ways to save money on your mortgage payments.
Negotiate closing costs. Closing costs are necessary to settle the transaction between all the parties involved in the sale of a property. The parties include the seller, the buyer, a title company, possibly the buyer and/or seller’s attorney, and the real estate agent(s). Some closing costs are negotiable.
Negotiable fees. These can include homeowners insurance, rate lock fee, loan application fee, origination and underwriting fee, Real estate agent commission, and title insurance.
Non-negotiable fees. These include property appraisal fee, government fees, stamp and tax service fees, credit check fee, courier fees, and property taxes (a portion of which may be payable at closing).
Choose a longer mortgage term. Choosing a longer payment term (30 years vs. 15 years) means each monthly payment will be less, due to the spreading out of payment of the loan amount over time. While monthly payments will be less, you’ll pay more in interest on a longer-term loan.
Choose a shorter mortgage term. Shorter term loans (15 years vs. 30 years) come with lower interest rates because the lender is enduring less risk in this shorter period. Your monthly payments will be higher due to a condensed payment schedule, but you’ll save money in interest over the course of the loan term.
Buy during winter months. With summer being the most popular home selling season, you may get a better price on a home if you shop during winter. It won’t save you money on mortgage interest, but it could save you money on the price of the home because sellers may be more motivated to close the deal.
Learn more about how to get closing costs waived.
As you shop for a mortgage loan, be aware that lenders will ask your permission to do a check of your credit score known as a “hard inquiry.” This will cause a small temporary drop in your credit score. But don’t worry, the credit bureau Experian notes that credit scoring models recognize rate shopping for a loan as a positive financial move, and typically regard multiple inquiries in a limited time as just one credit event.

Why savvy consumers choose CU SoCal

For over 60 years CU SoCal has been providing financial services, including mortgages, Home Equity Loans, HELOCs, car loans, personal loans, credit cards, and other banking products, to those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County.
Please give us a call today at 866.287.6225 today to schedule a no-obligation loan consultation with a CU SoCal Member Services specialist.

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Credit Union of Southern California (CU SoCal) is a leading financial institution empowering those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County to reach their goals and build strong financial futures. CU SoCal provides access to convenient money management services and offers competitive rates and flexible terms on auto loans, mortgages, and VISA credit cards—turning wishing and waiting into achieving and doing.


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