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When it comes to mortgage lenders, you’ll never get an offer you can’t refuse on the first try.
You’ll need to negotiate — and learning how to haggle for the best mortgage rate can save you thousands of dollars.
Every penny counts these days. The 30-year fixed mortgage rate is almost two percentage points higher since the year began. Rising rates coupled with inflated home prices are putting homebuyers in a financial pinch.
The good news is many lenders are able and willing to negotiate mortgage rates to get your business. Although they probably won’t lower your rate out of the goodness of their heart, they might reduce it if another lender has offered a better deal. “The homebuyer should talk to more than one lender in the homebuying process because they may encounter different fees and may be able to negotiate with one lender versus another,” says Dr. Jessica Lautz, vice president of demographics and behavioral insights at the National Association of Realtors.
Even a small change in your interest rate on a 30-year mortgage term can make a big difference. In fact, homebuyers who get at least one additional rate quote saved an average of $1,500 over the life of their home loan, according to a Freddie Mac study. Homebuyers who got at least five quotes saved twice that amount.
Unfortunately, almost half of home shoppers only get a single rate quote, according to the study, thereby missing out on savings and limiting their ability to negotiate for better rates.
That’s why arming yourself with negotiation tactics could help you battle today’s inflated interest rates.
How to Negotiate Mortgage Rates
As with any negotiation, you want to be prepared when approaching your lender. One of the most effective steps you can take is to shop around with multiple lenders.
Here’s how to go about your negotiation:
1. Shop Around With at Least Three Lenders
While you can compare mortgage rates from as many lenders as you like, Curtis Wood, founder and CEO of Bee, a mobile mortgage app, recommends getting offers from at least three.
“My best suggestion is really just to get three loan estimates at the beginning,” says Wood.
“Then call the bank and say, ‘I’ve got a quote that’s lower than yours, can you beat it?’ This …….