5 Ways To Get A Lower Mortgage Rate
With interest rates increasing, are there other alternatives to lower your rate?
There are a few options that could be worth looking into, but I would recommend working with a good lender and realtor who can best assess your financial situation, while also doing your own research.
- Sticking with a 30 year, but going with a different lender - This one can be tough as we have existing relationships with our lenders, but sometimes we can save thousands by shopping around. As an example, with rates hovering close to 7%, by shopping one of my buyer clients was able to get a 5.8% rate last week.
- Consider going to a 20 year, 15 year, or 10 year loan - Generally rates on these loan products are cheaper, not to mention the savings on interest throughout the life of the loan. For example, on a $300,000 loan at 5.5% interest, you would save $172,000 in interest by switching to a 15 year from a 30 year.
- Going cash - I am seeing more buyers use cash now, since the cost of borrowing has gone up and the return in other investments, like the stock market, has been decreasing.
- New Construction Incentives - Some builders are offering rates as low as 3.99% fixed over 30 years right now. That is clearly a great deal!
- Adjustable Rate Mortgages - Less than 10% of Americans use adjustable rate mortgages (ARM), but they can be a smart play. Right now 5/1 ARM’s and 7/1 ARM’s have the lowest rates of mortgage products that I’m seeing. How the 5/1 and 7/1 products work is they stay fixed at the initial rate for those first five or seven years and then increase to the market rate. If you believe mortgage rates will go back down, then this is a solid choice to make in the interim.
As always, please let me know if you have any questions or want to go into more detail on any of these options.