How To Lower Your Mortgage Interest Rate

Even if you have a relatively low interest rate on your mortgage, the amount that you'll pay in interest on your loan over the entire course of your repayment can be quite significant. In order to save as much as possible, it's important that you try and keep the lowest interest rate that you can. Many people mistakenly believe that once you've received your mortgage there isn't anything that you can do to lower the interest rate that you pay; provided you aren't behind on your payments and have a good history with your lender, though, this isn't the case.

If you're interested in reducing your mortgage interest rate and getting the best deal that you can on the money that you have to pay back, here are some suggestions of how to get started.

On-Time Payments

Making your mortgage payments on-time is an essential first step to being able to lower your mortgage interest rate. By making your payments on-time or early, you not only are reducing the total amount that you owe and avoiding late fees but you're also building a trusting relationship with your lender and showing them that they can count on you to get them their money when it's due. This can make them much more likely to offer you a lower interest rate if you request one (or in some cases to lower your interest rate even without you having to ask for it.)

If possible, paying slightly more than the amount of your due payment can also be a great way to get your lender to lower your interest rate. This will establish a trust in you making your payments even quicker, and will also have the added benefit of reducing the total amount that you owe faster and will ultimately result in your mortgage being paid off well ahead of schedule.

Being Aware of Shifting Interest Rates

Interest rates set at the national level fluctuate frequently, as do the average interest rates that are offered by other lenders. By keeping track of these fluctuations, you may discover that interest rates have significantly dropped since the time when you originally took out your mortgage and that you're paying more in interest than you would be if you had applied for a mortgage more recently. This can be a great time to request a review of your loan in hopes of getting a lower interest rate, especially if you've been making all of your payments on-time or if you have additional accounts with the bank or lender that holds your mortgage note (provided that those other accounts are current as well, of course.)

This can also help you to know when you're paying below the national average, which is also a very useful piece of information; if you're already paying less than most other people who are applying for mortgages today, then the likelihood of your interest rate being reduced more is significantly reduced.

Negotiations with Your Lender

The best way to get your lender to reduce your interest rate is simply to talk to them… contact one of the loan officers at your bank or loan provider and set up a meeting. Be sure to point out your good payment history, especially if you've been paying more than the minimum payment; mention that interest rates are low elsewhere if that is the case as well. Don't seem desperate, but present a fact-based case to them so that they can review your mortgage rate and see if they can lower it.

Keep in mind that you won't always be able to get your interest rate reduced, especially if it has been adjusted within the past several months already. If you've been making good payments and are otherwise a good customer for the lender, then it's likely that they'll do what they can to keep you happy provided your interest rate isn't locked in (or sometimes even if that is the case.)
Refinancing

If you're stuck with a locked-in interest rate or your lender refuses to consider you for a lower rate for some other reason, then you might want to look into refinancing your mortgage loan completely. You can refinance at the same bank or lender, or choose a different one that will offer you a better deal. Refinancing is basically the process of taking out a new loan that's used to pay off the old one, and ideally provides you with a lower mortgage interest rate than you had on your original loan. Monthly payments may also end up lower than what you were paying, since you've got both a lower interest rate and a smaller amount to repay. Make sure that you're careful when refinancing, though, or you may end up paying more than you expected to.