Can You Negotiate Mortgage Rates? | 6 Ways to Negotiate

By: Gina Freeman Updated By: Ryan Tronier Reviewed By: Paul Centopani
March 26, 2024 - 10 min read

Yes, negotiate your mortgage rate

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 homeowners, 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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Can you negotiate mortgage rates?

Yes, you can negotiate mortgage rates. This holds true whether you are a first-time home buyer securing your first mortgage loan or a seasoned homeowner looking for a lower rate with your current lender.

The secret to negotiating mortgage rates is comparison shopping. In fact, a Freddie Mac survey found that borrowers who obtained quotes from multiple lenders were able to achieve lower rates compared to those who didn’t.

When you comparison shop for lower interest rates, you position yourself to negotiate more effectively, potentially reducing your mortgage payments and the total cost of the mortgage loan substantially.

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

How to negotiate mortgage rates

Whether you’re buying a new home or refinancing 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

Here’s what every negotiator should know about how to get a lower interest rate.

1. Check your credit score

The first step in negotiating mortgage rates is to understand your credit score. This is particularly true if you have good credit, which can significantly enhance your bargaining power. Borrowers considered lower-risk have a greater chance of negotiating mortgage rates with lenders. A high credit score greatly strengthens your bargaining position.

AnnualCreditReport.com allows you to request free credit reports once per year. Here, you’ll get free credit reports from the three major credit bureaus:TransUnion, Equifax, and Experian.

A higher credit score of 750 or above can potentially secure a more competitive rate compared to a score below 600.

Compare rates with multiple lenders. Start here

If you have a lower credit score, you can make improvements by paying down any auto loans and credit card debt, avoiding late payments, and refraining from opening new credit lines before negotiating interest rates.

2. Identify which type of mortgage is right for you

You have a range of loan options available, such as conventional loans and government-backed loans like FHA loans, VA loans, and USDA loans. You can underwrite all these types of mortgages as either fixed-rate mortgages (FRMs) or adjustable-rate mortgages (ARMs).

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.

Selecting the right loan type relies on your understanding of your home equity and long-term financial goals.

Tip: A mortgage calculator is a very helpful tool for figuring out possible monthly payments and total loan costs for different types of home loans.

3. Compare rates from multiple lenders

To find the best mortgage deal, start by asking multiple lenders for initial rate quotes. This helps you see who offers lower rates. Next, apply for pre-approval with the lenders that fit your needs best. They’ll send you Loan Estimates, which detail the rates, fees, and terms for each mortgage.

Compare rates with multiple lenders. Start here

Remember, getting pre-approved doesn’t lock you into choosing that lender, as the Consumer Financial Protection Bureau (CFPB) points out. Wait until you’ve made an offer on a house and received Loan Estimates from all potential lenders before deciding. Try to do all this within a 14-day period to avoid hurting your credit score too much.

Besides the mortgage interest rate, look at the Annual Percentage Rate (APR), which includes the interest rate and other upfront costs like discount points and origination fees. This gives you a fuller picture of the loan’s total cost. Lenders must give you a Loan Estimate with the interest rate, APR, monthly payments, and a list of fees within three days after you apply.

Comparing these estimates helps you spot the differences between lenders. Some may offer lower rates but higher fees, and vice versa. This comparison lets you choose between a lender with lower initial costs or one that offers savings over the life of the loan.

Don’t forget mortgage brokers

You can also opt to work with a mortgage broker, who can both find the lowest rates and negotiate on your behalf. A broker often knows which lenders are more receptive to negotiation or offer deals that align with your circumstances.

4. Make your loan officer compete for your business

With several different Loan Estimates in hand, it’s time to negotiate mortgage rates with potential lenders. Now, it’s time to turn competition into your bargaining chip. When you receive a lower interest rate offer from one lender, use it to persuade another lender to match or even undercut that rate.

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.

5. Consider buying down your mortgage rate

Buying down your rate is when you purchase discount points from your mortgage lender. By purchasing a discount point, you pay a fee in exchange for a lower mortgage rate throughout the duration of the loan. Usually, you pay 1% of the total loan amount for one discount point, which reduces your rate by approximately 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. Discount points are often beneficial when buyers plan to stay in their homes for a long time.

6. Lock in your best mortgage rate

Once you’ve found your lowest mortgage rate, it’s time to lock in that rate. A rate lock not only freezes your interest rate but also ensures your monthly payments remain stable throughout the closing process.

Find your lowest mortgage rate. Start here

Rate locks shield you against rising interest rates, but they also prevent you from taking advantage of any future rate reductions while the lock is in place. However, some lenders offer a rate float-down option to provide more flexibility.

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%.

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.

Comparing mortgages rates is the key to negotiating lower rates

Mortgage loans 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 mortgage negotiating 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 mortgages like jumbo loans or FHA loans.

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.

Mortgage negotiation FAQ

Shop rates from multiple lenders. Start here

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 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.

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 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 upfront costs and other mortgage terms and conditions.

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.