Your mortgage rate and fees decide how much you pay for your home over many years. Even a small difference adds up. The good news is that you have more room to negotiate than most buyers think. These five habits help.
1. Strengthen your credit before you apply
Lenders use your credit score to price risk, and a higher score generally means better pricing. A few months before you apply:
- Pay every bill on time
- Pay down credit card balances
- Avoid opening new credit accounts
- Check your reports for errors at AnnualCreditReport.com
2. Compare more than one offer
Ask for a Loan Estimate from at least two or three lenders or brokers on the same day, for the same loan type. The Loan Estimate is a standard three-page form, so offers are easy to compare line by line. Rates change daily, so compare quotes made at about the same time.
3. Look at the whole cost, not just the rate
The interest rate is only one part. Compare:
- The annual percentage rate (APR)
- Origination and underwriting fees
- Discount points, if any
- Third-party fees such as appraisal and title
- Any prepayment penalty
A slightly higher rate with lower fees can cost less overall, depending on how long you keep the loan.
4. Understand rate locks
Rates move with the market. A rate lock holds your quoted rate for a set period, often 30 to 60 days, while your loan is processed. Ask what a lock costs, how long it lasts, and what happens if closing is delayed. A lock protects you from a rise, but it does not follow the rate down if the market improves, unless your lender offers a float-down option.
5. Ask a licensed professional
A licensed mortgage broker can request pricing from several lenders and explain the trade-offs. A broker may be able to find options that fit your situation, but no one can promise you the lowest rate. Ask how the broker is paid, and get everything in writing.
Every borrower is different. If you would like to talk through your own situation, the MonaLending team is happy to help.
