Many don’t know this but mortgage rates aren’t written on stone. This means that you still have the power to lower it down based on several factors.
Always keep in mind that lenders want you to settle your loans on time without any hang-ups. If you show them that you are capable of doing this, they will be more than willing to decrease the interest rates to more comfortable levels.
It’s all about showing your lenders that you are doing everything you can to settle the debt. Below is an overview of some of the most efficient ways on how you can lower your mortgage rate.
1. Focus on improving your credit score.
Your ability to negotiate for a lower mortgage rate mostly depends on your credit score.
The higher your credit score is, the better chances you have in getting a lower rate. When you apply for a loan, the first thing that a lender looks at is your credit score.
They’ll provide you with a rate based on your score. Now, if you were given the loan at a specific rate, you can still lower the rate by either maintaining your score or increasing it.
2. Don’t be afraid to ask for a lower rate.
Sometimes, it’s a good idea to directly talk to the bank that holds your mortgage and ask for a decrease in your monthly payments.
However, before you do, you should make sure that you’ve paid your dues in time during previous payments. Also, if your credit score has increased from the time you signed the mortgage deal, you are more than entitled to a lower rate.
3. Maintain a good work history.
Just like your credit score, your work history is an important factor that lenders look into to determine if you deserve a lower mortgage rate.
If you have been working with the same company for years with an increasing income, this gives lenders the impression that you are a low-risk debtor. It would be easier for you to negotiate for a lower rate from them.
4. Try to extend your repayment term.
This strategy is often referred to as recasting or re-amortization. What you need to do is ask for a longer period to settle your loan.
With a longer period, your monthly payments will go down. Sometimes, you will have to pay a fee to extend your repayment term but there are lenders who are willing to waive off this fee.
5. Offer a larger down payment.
You should consider this strategy if you have enough cash or liquid assets. If you offer a larger down payment, this will significantly drive down your mortgage rate. Not only will this lower the rate, it also earns the lender’s trust.
6. Consider refinancing your mortgage loan.
This is one of the most practical ways on how to lower your mortgage payment and interest rate so that you will pay less installments over the life of your loan.
Lowering your mortgage rate is not as difficult as you might think. With the right approach and strategies, your lenders will be more than willing to accept renegotiating with you.