How To Get The Lowest Mortgage Interest Rate Possible

Refinancing a mortgage today is a smart move with interest rates having fallen to 6-year lows in 2020. With trade war tensions with China, Oil Price Battles, and COVID-19 wrecking many people’s ability to earn normal wages, the 10+year bull market in stocks has ended.

Lending standards are also strict with ~740 being the average credit score for denied mortgage applicants in 2020. With these higher lending standards, I feel confident that the next housing market correction won’t be nearly as bad as the last one.

Mortgage rates are still historically low and you may have plenty of loan options, but take some time to figure out whether refinancing is your best move right now. How long you plan to stay in your home, your financial goals and your credit profile all play a role in your decision about whether — and when — to refinance.

I’ve refinanced one mortgage which was a 5/1 ARM loan and currently refinancing my VA loan through the VA IRRRL (Interest Rate Reduction Loan). Here are my strategies for how you can get the lowest mortgage rate possible.

How To Get The Best Rate Possible

1) Question your existing mortgage lender: The easiest course of action is to ask your existing mortgage lender if they can lower your mortgage rate. After all, they don’t want to lose your business to a competitor.

2) Shop around online: A great option is Credible, a leading mortgage comparison marketplace to see what their lenders could come up with. I like Credible because they provide real mortgage quotes from pre-vetted, qualified lenders who are competing for your business. Within minutes of filling out the application, I was contacted with mortgage rates between 2.75% – 3%.

3) Track down your old mortgage officer: The mortgage officer who first helped you refinance your loan might have moved elsewhere. If so, track him or her down and tell him or her you’d like to do business.

Mortgage officers at new banks would love to win over business from their old bank. As a result, they may often given you a better rate. It’s worth starting a new application with a new bank so you have something in writing to negotiate with your existing mortgage lender.

4) Ask about multiple accounts: Banks are all about cross-selling you products. Not only do they want to refinance your mortgage, they’d also love for you to open a savings account, a business account, an investment account, a Home Equity Line of Credit, and more.

You want to dangle the carrot by telling the lender that if they match or beat a certain rate, you plan to open up several new accounts. As good faith, you can open up a simple account such as a savings account, especially if they have a promotion.

Banks want sticky clients with multiple accounts for cross selling and revenue generation purposes. There is no legal quid pro quo that banks can use to get you better terms. But every big bank has a tiered client system in place where clients with more assets get better access, rates, and benefits.