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Can You Negotiate Mortgage Loan Interest Rate?

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I recently received an email from Dustin, who blogs at, about whether or not an interest rate on a mortgage is actually negotiable.

I was recently pre-approved for a mortgage. I was wondering if you knew if the interest rate I was give is negotiable or if there are situations where it is. Since I will be paying so much to interest, I thought I would see how I could lower this rate since the variables which generated it are fixed.

Thanks. Keep up the good work.

My response was:

I don’t think the rate itself is negotiable with the lender that offers it because they generated it based on a variety of factors, some of which are your own credentials. You can lower it by paying points or maybe putting down a larger deposit, things like that, changing the characteristics of the loan.

What you can do is get quotes from other lenders because lender specific characteristics, how badly they want your class of loan (etc), could lead to quarter percent or eighth of a percent difference. Also, closing costs could be lower with someone else.

Since I’m neither a lender nor an expert, I don’t know how negotiable the interest rate is but if anyone else has any information they can shed, I’m sure it would be very much appreciated.

{ 8 comments, please add your thoughts now! }

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8 Responses to “Can You Negotiate Mortgage Loan Interest Rate?”

  1. Very negotiable. Just find somebody that has a more competitive rate for the same basic package, and then see what your current broker can do for you. You’ll find that they can get creative with the data and find a better rate for you; them making less money is better than them making no money.

  2. broknowrchlatr says:

    They are negotiable most of the time. Less negotiable with a Bank and more with mortgage brokers. I have used American Federal (a mortgage broker) and tried negotiating.

    Each time, they said they would beat anyone else by 1/8 % or by $500 in closing costs or give me $500. After many hours of research, I could never find anyone that beat their rates.

    Don’t count this as a full endorsement of American Federal. They can be a huge pain in the butt. But if all you care about is the money you pay, they are good.

  3. MoneyNing says:

    The rate is definitely negoitiable. The easiest way is to just tell them that you were offered rate x% and ask them to match or beat it. Prove (like a pre-approval letter) would work best since every bank can match everyone else’s rates if they have to.

  4. Dustin says:

    Thanks jim and everybody who gave their input today. It was a great help. I will keep you posted on how it goes.

  5. rocketc says:

    I am signing a refinance deal tomorrow. I was able to lower the rate simply by shopping around. I ended up with the first lender that I consulted, but showed them several offers from other banks. My rate is at least .75% lower than when I started.

  6. i was able to get some leverage with lenders by getting a gfe from each and letting them duke it out.

  7. Debrajoy says:

    Yes, Yes, Yes–you can and I did -negotiate a lower rate on a mortgage refinance. My bank was advertising “no closing costs”. Basically I did what others here suggest, back in 2005.
    I called a couple brokers, asked them to e-mail me good faith estimates (which included up to $4,000.00 closing costs) and then took them (printed up – hardcopy) to my bank and asked them to match it. They did better, they beat it, by a fraction and instead of the 5.75% that they were advertising, I got them to 5.24%, 30 year fixed!! and ZERO closing costs.
    When I told my husband that I was going to go back to the banker and attempt to “wheel and deal” with them, he said, “I’m not going in there with you while you beat those people up”. (I think he was embarrassed that I would have the audacity) — to which I responded, “they are not afraid to take my money and I’m not afraid to go toe to toe with them to save our money.”
    No regrets!!! and a whole lot of savings which I faithfully apply directly to the principal.

  8. SMADD says:

    Has anyone been successful negotiating a better rate with an existing mortgage company on a second mortgage?

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