Can You Negotiate Mortgage Rates? | Lower Your Rate 2025

Are mortgage rates open to negotiation?

Can you negotiate mortgage rates? Yes, you can and should negotiate a mortgage rate when you’re getting a home loan. Research confirms that those who get multiple quotes get lower rates. But surprisingly, many home buyers and refinancers skip negotiations and go with the first lender they talk to.

Instead, exercise your power by learning how to negotiate mortgage rates, obtaining multiple rates and asking for the best deal. Not negotiating means you’re leaving money on the table.

In this article (Skip to...)

• Negotiating mortgage rates
• Factors affecting mortgage rates
• Negotiating fees and closing costs
• Mortgage rate negotiation tactics
• FAQ

How to negotiate mortgage rates

Whether you’re a first-time home buyer looking for a new home or a homeowner who wants to refinance your current mortgage, mortgage rate negotiation is possible. However, it’s not as simple as haggling over percentage points. Learning how to negotiate mortgage rates involves understanding what factors impact your rate, such as your credit score, down payment, and loan type.

To negotiate a better mortgage rate, you’ll have to prove that you’re a creditworthy borrower. And you’ll have better luck if you come to the table with a lower quote from a different lender in hand.

Here are four strategies for how to negotiate mortgage rates before you lock:

1. Shop around with multiple lenders
2. Ask your lender to match lower interest rate offers
3. Negotiate with discount points
4. Strengthen your mortgage application

We cover each rate-negotiation strategy in more detail below.

But the rule of thumb is this: If you have strong personal finances, and you’re willing to get quotes from different lenders, you can usually negotiate a lower rate for your mortgage. The key is being proactive in your approach, knowing how to negotiate mortgage rates, and using your financial standing to secure a better deal.

Factors affecting mortgage rates

Understanding the key factors that influence mortgage rates can significantly strengthen your mortgage rate negotiation. Here's what you need to know:

1. Economic factors: The overall economic climate, including Federal Reserve policies, inflation rates, and employment figures, impacts mortgage rates. While you can't control these, staying informed about economic trends can help you time your application or rate lock advantageously.
2. Personal financial profile: Your credit score, credit history, debt-to-income ratio, and down payment size all play key roles in determining your rate. Lenders typically offer better rates to borrowers with higher credit scores, lower debt-to-income ratios, and larger down payments. Focus on improving these factors before applying to strengthen your bargaining power.
3. Loan type and term: Different loan types (conventional, FHA, VA) and terms (15-year, 30-year) come with varying rate structures. Understanding these differences can help you choose the most favorable option.

When considering your mortgage rate negotiation strategy, leverage your strengths in these areas and your knowledge of current market conditions to pursue the best possible rate. 

Negotiating your mortgage fees and closing costs

Your interest rate is a big part of how much your loan will cost, yet it's not the only factor to consider when securing a mortgage. There are other upfront costs and fees that accompany it. You should plan to compare and negotiate these fees when you talk to lenders and third-party service providers.

Some are negotiable, while others are typically fixed. Let's take a closer look at each category.

Negotiable fees

While this is not an exhaustive list of mortgage fees, these are among the most commonly negotiated costs found on your Loan Estimate.

• Loan underwriting or origination fee: Charged by lenders for processing new loan applications, this is usually one of the most substantial fees. It's negotiable and varies from lender to lender
• Application fee: In certain cases, lenders impose a fee for submitting a mortgage application. However, it's worth noting that this fee can sometimes be waived or reduced
• Points: These refer to prepaid interest on the loan, paid upfront to decrease the interest rate. The number of points you choose to purchase can be negotiated
• Title services: This covers the cost of title searches, title insurance, and attorney fees. You can often negotiate these costs and shop around for the best deal
• Home inspection and appraisal fees: When it comes to these services, you're not bound to a single provider. You have the flexibility to explore options, potentially negotiating a lower price
• Real estate agent commission: There’s no law forcing your real estate agent to charge a 3% commission. Ask them to negotiate

Non-negotiable fees

While it's generally not possible to negotiate the cost of these fees with a single lender, you have the option to compare and contrast them across different lenders. Here's a closer look at some of these fees:

• Recording fees: These charges cover the legal recording of your new mortgage and title. They are unnegotiable and set by the city or county
• Property taxes: These are also set by your local government based on the assessed value of the property. Unfortunately, they are fixed and cannot be negotiated.
• Prepaid daily interest charges: If your closing falls within the middle of a month, your lender will collect interest from the closing date until the end of the month. This charge is calculated based on your interest rate and the loan balance, making it non-negotiable
• Credit report fees: These fees cover the cost of pulling your credit score and history
• Escrow fees: These are fees for the service of holding your deposit until the transaction is completed. You can sometimes negotiate these fees or choose a different escrow service.
• Mortgage insurance: Depending on the type of loan, you may pay various types of mortgage insurance premiums or guarantee fees, which are all non negotiable. For example, conventional loans charge private mortgage insurance (PMI) with down payments less than 20%.

Tips for reducing closing costs

When negotiating your mortgage fees and closing costs, it's important to understand which fees are negotiable and how to effectively reduce your upfront costs. Here are some strategies to help you minimize your closing costs:

1. Shop around for service providers. Don't simply accept the lender's recommended providers for services like title insurance or home inspections. Compare quotes from multiple lenders to find the best deals.

2. Ask for a Loan Estimate from multiple lenders. This document breaks down all the loan costs, allowing you to compare offers and potentially negotiate better terms.

3. Consider negotiating mortgage rates in exchange for higher closing costs. Sometimes, accepting a slightly higher interest rate can result in lender credits that offset your closing costs.

4. Look for first-time home buyer programs. Many state and local governments offer down payment assistance programs and grants that can help reduce closing costs for eligible borrowers.

5. Time your closing strategically. Closing at the end of the month can reduce the amount of prepaid interest you need to pay at closing.

6. Bundle services. Some lenders offer discounts if you use their affiliated services for things like title insurance or escrow.

Remember that every loan and every lender are different, so what can be negotiated in one situation might not be in another. Ask questions, try to get clear answers, and try to negotiate whenever you can. Your diligence will result in more affordable mortgage terms.

Mortgage rate negotiation tactics for different types of borrowers

When it comes to a mortgage rate negotiation strategy, different types of borrowers may need to employ varying strategies. Here are some effective mortgage negotiation strategies for securing a better mortgage rate, tailored to specific borrower profiles:

First-time home buyers

As a first-time home buyer, you may lack experience but often have access to special programs. It's important to remember that mortgage rate negotiation is possible, and knowing how to negotiate mortgage rates can save you money. Use these tactics when negotiating home loan terms:

1. Leverage first-time buyer programs. Many lenders offer special rates or terms for first-time buyers. Mention this status upfront and ask about available programs.
2. Highlight your potential. If you're early in your career, emphasize your earning potential and job stability to negotiate better terms.
3. Bring a larger down payment. If you've saved a substantial down payment, use this as a negotiating point for a lower interest rate.
4. Consider an FHA loan. These often offer competitive rates for first-time buyers. Use FHA quotes to negotiate with conventional lenders.
5. Ask about rate buydowns. Inquire if the seller or lender can contribute to temporarily buying down your rate for the first few years.

Refinancing homeowners

Refinancing can be an excellent way to secure lower interest rates and reduce mortgage payment. Here are some tips for how to negotiate mortgage rates when refinancing:

1. Leverage your payment history. If you've been consistent with your current mortgage payments, use this as evidence of your reliability. A strong credit history can be a useful tool in mortgage rate negotiation.
2. Highlight increased home value. If your home has appreciated significantly, your loan-to-value ratio may have improved, potentially qualifying you for better rates.
3. Negotiate closing costs. Ask your current lender if they can offer a no-closing-cost refinance to earn your continued business.
4. Use competitor offers. Get quotes from multiple lenders and use these to negotiate with your preferred lender to secure lower mortgage interest rates.

High-credit-score borrowers

If you have a good credit score, you're in a strong position for mortgage rate negotiation. Try these tactics:

1. Ask for their best rate upfront. Let lenders know you're a strong borrower and expect their most competitive offer.
2. Negotiate lender fees. With a high credit score, you might be able to get certain lender fees reduced or waived.
3. Push for faster approval. Your strong credit profile might qualify you for expedited underwriting, which could save you money if rates are rising.
4. Explore relationship discounts. If you have substantial personal finances, ask if the lender offers rate discounts for opening a checking or savings account.

Negotiating with mortgage brokers

Working with a mortgage broker can be advantageous when trying to secure the best mortgage rates. Here's how to negotiate mortgage rates:

1. Request multiple options. Have your broker present several loan offers from different lenders to compare.
2. Negotiate the broker's fee. While brokers often charge fees for their services, these may be negotiable, especially if you're bringing a strong financial profile to the table.
3. Use competing offers. If you've received better offers elsewhere, share these with your broker to see if they can match or beat them.
4. Ask about lender-specific programs. Experienced brokers might know about special programs or promotions from certain lenders that you can leverage.
5. Leverage your debt-to-income ratio. If you've recently improved your DTI, make sure your broker is aware, as it could affect your purchase price range and potentially your rate.

FAQ: Mortgage rate negotiation

What are today’s best mortgage interest rates?

Even in a fluctuating market, the ability to negotiate mortgage rates can significantly impact the long-term cost of your home loan. 

So, can you negotiate mortgage rates? Absolutely! 

We advise exploring options from at least three to four different lenders to secure the most favorable rate. You can begin that process by clicking the link below.