Can You Negotiate Mortgage Rates? 7 Ways to Lower Your Rate

By: Gina Freeman Updated By: Ryan Tronier Reviewed By: Paul Centopani
November 1, 2023 - 12 min read

Yes, you can and should negotiate mortgage rates

When applying for a home loan, you can indeed — and should — negotiate mortgage rates.

Mortgage interest rates are not set in stone, and research confirms that those who get multiple quotes often secure lower rates. A surprising number of home buyers and refinancers, however, forego negotiations and settle with the very first lender they encounter.

Instead, change that narrative and use your bargaining power to negotiate the best deal possible. If you don’t, you’re most likely throwing money away.

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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, negotiating the best mortgage rate is possible. Can you negotiate mortgage rates? Yes, but it’s not as simple as haggling over percentage points.

Shop rates from multiple lenders. Start here

To negotiate a better mortgage rate, you’ll have to present yourself as a creditworthy borrower. You’ll increase your chances of a more favorable rate if you arrive at the table with a competitive quote from another lender.

But the rule of thumb is this: If you have strong personal finances and are willing to get quotes from different lenders, you can usually find a lower rate for your mortgage.

Whether you’re a first-time homebuyer or a seasoned homeowner, negotiation is your secret weapon.

1. Check your credit score

Before heading to the negotiating table, it’s essential to understand your credit score, particularly if you have good credit, which can significantly enhance your bargaining power.

Knowing your financial standing is the first step in a strategic approach to negotiate mortgage rates. allows you to request free credit reports from the three major credit bureaus—TransUnion, Equifax, and Experian—helping you identify where you stand.

2. Identify mortgage options that suit your finances

When it comes to loans, you have various options including conventional loans, fixed-rate loans and adjustable-rate mortgages (ARMs), and government-backed loans including FHA loans and VA loans.

Each loan type comes with its own set of terms and conditions that you’ll need to consider when you negotiate mortgage rates. For example, adjustable-rate mortgages may offer low introductory rates but can be volatile in the long run.

An understanding of your home equity and long-term financial goals will guide you in selecting the right loan type. A mortgage calculator is an invaluable tool for estimating monthly payments and overall loan costs.

Tip: Use a mortgage calculator and pull your credit history

By using a mortgage calculator, you gain insight into how your down payment, credit score, and interest rate work together to shape your mortgage payment.

3. Identify the best times to negotiate mortgage rates

Can you negotiate mortgage rates with banks? Absolutely, and knowing when to do so can make all the difference in securing a favorable rate. In general, there are three primary occasions when negotiating your mortgage is particularly beneficial.

  1. When securing a new mortgage. This is often the most opportune time to negotiate mortgage rates, as numerous lenders will be competing for your business. Make sure to compare multiple offers or check if your preferred lender can beat the competition.
  2. During mortgage renewal. A few months before your mortgage term ends, you’ll likely receive a renewal letter from your existing lender. Rather than immediately agreeing to the terms, consider exploring other options in the market, as switching could result in substantial savings.
  3. Midway through your mortgage term. If current mortgage rates decline, it might be an option to renegotiate or refinance your existing mortgage for a more favorable rate. However, always check for any associated prepayment penalties.

4. Get rate quotes from multiple lenders

While it may take some time, shopping around for a low mortgage rate is well worth the effort. Even a slightly lower interest rate can save you money on both your monthly mortgage payments and throughout the life of your loan.

Compare rates with multiple lenders. Start here

As an example:

  • The monthly payments on a 30-year fixed-rate mortgage for $250,000 at 6.75% is $1,549
  • That same loan, with a 6.50% interest rate, has monthly payments of only $1,516
  • While a monthly savings of $33 may not sound like much, you’ll save $11,880 over the life of a 30-year loan

To see similar savings, request rate quotes from multiple lenders. Each lender will provide you with an estimate that will help you compare mortgage interest rates, closing costs, lender fees, and other borrowing expenses like home appraisal fees, credit report fees, and title insurance.

Remember that providers with the lowest upfront mortgage rates might not actually be the “cheapest” once points, fees, and closing costs are tallied up.

Lenders maintain a certain degree of flexibility with the rates they offer. So if you prefer one lender—maybe because you know the loan officer personally, or they have a branch nearby—don’t be afraid to approach them with a lower estimate and kindly request that they match it.

In some cases, the company you want to work with will be able to negotiate mortgage rates to compete with other loan estimates. Other times they won’t, but it never hurts to ask.

5. Make your lender compete for your business

When you negotiate mortgage rates with lenders, you can often benefit from significant savings over the life of the loan. In such a case, it’s critical to take advantage of the market’s competitiveness. When you receive a lower interest rate offer from one lender, use it to persuade another lender to match or even undercut that rate.

Begin by requesting an official Loan Estimate or pre-approval document from the lender offering the lower interest rate. This document serves as verifiable evidence of the competing offer, making it an invaluable asset in your negotiation arsenal. Remember that valid documents are often more responsive to lenders than verbal claims.

Find your best mortgage rate. Start here

Openly and professionally communicate the lower offer to your preferred lender, expressing your interest in working with them while emphasizing the financial implications of the lower rate. Do not be afraid to mention that a matched or better rate may sway your decision.

For example, you could say, “I appreciate the service you provide and am eager to finalize my home loan with you. However, I received a loan estimate from another lender at 6.75%, as opposed to the 7% that you’ve offered. If you could match or beat this interest rate, it would have a significant impact on my decision to work with you.”

Most lenders place a high value on customer acquisition and retention, making them open to negotiations, including the opportunity to negotiate mortgage rates. However, if the lender does not match the offer, it’s wise to be prepared to explore other lending options.

6. Lower your mortgage rate with discount points

You also have the option to buy discount points with most mortgage lenders. Discount points let you pay a little more upfront for a lower mortgage rate over the life of the loan. Typically, one discount point costs 1% of the total loan amount and lowers your rate by about 0.25 percent.

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Mortgage discount points example:

 With NO discount pointsWith ONE discount point
Loan amount$400,000$400,000
Cost to purchase discount point$0$4,000
Mortgage rate6.75%6.50%
Interest paid over 30 years*$533,981$510,178

*Loan assumptions: $400,000 home purchased in the state of Florida with 20% down. Rates and interest payments shown are for sample purposes only. Your own rate and payments will vary.

In this scenario, purchasing one point costs $4,000 at the closing table. But it would save the homeowner roughly $23,803 over the life of their loan.

7. Strengthen your mortgage application

This strategy might not be as helpful if you’re close to closing on a mortgage loan. But if you have a little more time before you lock in your rate, consider that a stronger application gives you some leverage to negotiate your mortgage rate.

Verify your new rate. Start here

Here’s the secret: the stronger your financial situation, the more appealing you become to lenders. Can you negotiate mortgage rates? Certainly, and lenders are more willing to negotiate to win over your business. That could mean trying for various terms and conditions that favor you.

  • Higher credit score: Take steps to raise your score before you apply. Stronger credit scores typically result in lower mortgage rates
  • Bigger down payment: A more significant down payment often leads to a lower mortgage rate. You’ll save even more if you can put 20% down and avoid private mortgage insurance (PMI)
  • Lower monthly debts: Paying off some debt from credit cards or other loans before applying leads to a lower debt-to-income ratio (DTI) and often a lower mortgage rate

Patience is key, though. The road to a higher credit score, accumulating a substantial down payment, or clearing debts requires time. But if you can wait a little while—or if your rates look worse than you thought and you want to make a change before trying again—these are good ways to score a significantly lower mortgage 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 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

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.

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 can make a difference in the overall terms of your mortgage.

Tips to negotiate mortgage rates and fees more effectively

It can seem daunting to negotiate a mortgage rate and fees, but it’s a process that can be navigated strategically. Below are key steps to getting the best possible deal on your mortgage.

Understand your local real estate market

Before entering negotiations, make sure you understand the current state of the mortgage market in your area. This will equip you better to negotiate mortgage rates. You can do this by regularly reviewing major mortgage lenders’ websites or financial news outlets.

For instance, you might consult the Freddie Mac Primary Mortgage Market Survey for benchmark rates. Online mortgage calculators are also invaluable tools. Equipping yourself with knowledge about prevailing rates gives you the knowledge to recognize a good offer when you see one.

Improve your credit score

Lenders are more inclined to negotiate mortgage rates with borrowers they consider lower-risk. A high credit score can thus significantly bolster your bargaining position.

Compare rates with multiple lenders. Start here

Strategies for improving your credit score include paying down your debts, avoiding late payments, and refraining from opening new credit lines in the months leading up to negotiations.

A high credit score, especially 750 or above, can potentially secure a more competitive rate than a score below 600.

Be transparent

Effective communication with potential lenders is key when you want to negotiate mortgage rates. Be clear about your needs, your financial situation, and what you’re looking for in a mortgage. Providing accurate documentation and expressing that you’re serious about securing a good deal can put you in a more favorable position for negotiation.

As an example, providing proof of a stable income and a strong saving history can enhance your credibility and appeal with lenders.

Shop around

This was also a tip for negotiation, but it’s worth repeating. Comparing rates from different lenders can help you find the best mortgage rate without the need for negotiation.

Consider this scenario: one lender might offer a 7.5% rate, while another may offer 7.2%. Shopping around can help you find these variances and make an informed decision.

Consider a mortgage broker

A mortgage broker can act as an intermediary between you and potential lenders. Their established relationships and negotiation skills can be advantageous.

A broker often knows which lenders are more receptive to negotiation or offer deals that align with your circumstances.

Lock-in your lowest rate

Seeking a mortgage rate lock is the only method to safeguard your best offer. By doing this, you lower the possibility that the rate may rise before you close.

Determine how long to lock in your rate with your loan officer, and make sure there are no up-front costs associated with it.

Why you have to shop to negotiate mortgage rates

Mortgages are a lot more regulated than they used to be. Consequently, individual loan officers have less wiggle room to change rates from customer to customer. That’s why we explore tactics such as comparing Loan Estimates and purchasing discount points to lower your rate, rather than trying to bargain with your loan officer.

Compare rates from multiple lenders. Start here

In today’s real estate market, some lenders are more efficient than others. These lenders lower operating costs by using online applications and digital processing. The savings from these overhead costs often get passed on to customers, giving you more room to negotiate mortgage rates. Conversely, other providers handle significant loan volumes, allowing them to offer reduced lender fees and rates while still maintaining profitability.

Moreover, almost every lender also has some sort of niche with different types of mortgages. Some cater to low-income or low-credit borrowers, while others are more geared for self-employed people or offer specialized loans like jumbo or FHA.

So, shopping around doesn’t just provide you with leverage to negotiate a lower mortgage rate. It also helps you pinpoint mortgage lenders that specialize in the type of loan you need. By connecting with a lender that specializes in your specific type of mortgage, you increase the chances that you can negotiate mortgage rates in your favor.

Negotiate mortgage rates FAQ

Can you negotiate mortgage rates?

Yes, mortgage rates are often negotiable. Borrowers can shop around, compare rates from different lenders, and then use these rates to negotiate mortgage rates with their preferred lender.

Can banks offer better mortgage rates?

Yes, banks and credit unions can offer better mortgage rates. Various financial institutions have different lending practices and risk assessments, influencing the rates they provide. Some may even offer special rates to their existing customers, which gives you an opportunity to negotiate mortgage rates with your current bank.

Can you negotiate a mortgage rate after locking in?

Generally, once you’ve locked in a mortgage rate, the terms are fixed and usually cannot be renegotiated. However, some lenders offer a float down option, allowing you to negotiate mortgage rates if the market conditions shift favorably during the rate lock-in period.

Can I negotiate my mortgage offer?

Yes, you can negotiate your mortgage offer, which includes not just the interest rate but also fees and other loan terms. It’s crucial to understand your offer fully, as this will allow you to negotiate mortgage rates and terms more effectively.

Can you negotiate mortgage refinance rates?

Absolutely, you can negotiate mortgage refinance rates. Much like with an initial mortgage, lenders are often open to negotiations to secure your business. Having quotes from multiple lenders enables you to negotiate a more favorable refinance rate.

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.

Time to make a move? Let us find the right mortgage for you

Gina Freeman
Authored By: Gina Freeman
The Mortgage Reports contributor
With more than 10 years in the mortgage industry, and another 10 years writing about it, Gina Freeman brings a wealth of knowledge to The Mortgage Reports as its Associate Editor. Gina works with a team of world-class real estate and finance writers to bring timely and helpful news and advice to the audience. Her specialty is helping consumers understand complex and intimidating topics.
Ryan Tronier
Updated By: Ryan Tronier
The Mortgage Reports Editor
Ryan Tronier is a personal finance writer and editor. His work has been published on NBC, ABC, USATODAY, Yahoo Finance, MSN Money, and more. Ryan is the former managing editor of the finance website Sapling, as well as the former personal finance editor at Slickdeals.
Paul Centopani
Reviewed By: Paul Centopani
The Mortgage Reports Editor
Paul Centopani is a writer and editor who started covering the lending and housing markets in 2018. Previous to joining The Mortgage Reports, he was a reporter for National Mortgage News. Paul grew up in Connecticut, graduated from Binghamton University and now lives in Chicago after a decade in New York and the D.C. area.