How To Get the Best Mortgage Rate

Whether an individual has just purchased a home, or if a mortgage is coming up for maturity, obtaining the best rate possible for a mortgage can save individuals thousands or tens of thousands of dollars over the lifetime of a mortgage.  Bankers and financial institutions are in the business of creating shareholder value and ensuring profitability is as high as it can be.  In the majority of cases, a lender is not offering the best mortgage rate possible.  Actually, an individual is more likely to be offered the best rate possible when dealing with independent mortgage agents or mortgage brokers, who in most cases have their finders’ fees set based on their current discounted rates. 

If a mortgage is coming up for renewal, simply renewing it without attempting to negotiate a better rate is an immense mistake.  The same applies when purchasing a home and a brand new mortgage.  If this is the case one needs to be comfortable negotiating rates and shopping around for the best mortgage rate available.

Tips to follow for getting the best mortgage rate:

  • Obtain up-to-date information on current lending rates and find what additional lender specials are available
  • Contact a few lenders either in person or on the phone and inquire about rates; however, be prepared to engage with mortgage salespeople
  • Do not pay much attention to teaser rates; on the surface they look like fabulous attractive rates, but these low discounted rates are only for an initial small time period
  • Select one or two lenders and try to negotiate a better rate with them
  • Inquire about what fees the lenders would be covering or not charging, including appraisal fees, legal fees and discharge fees
  • Do not put any importance into the bank’s posted mortgage rates
  • Although tied selling is not allowed, banks and lenders are allowed to provide or offer better mortgage rates if the borrower consolidates extra business with them
  • Do not consolidate investments to simply obtain a better mortgage rate, but look at the overall picture of the  investment portfolio and the relationship with an existing advisor
  • Do not rush into mortgage decisions and mortgage commitments
  • In many cases, one can negotiate a better rate if possessing a good credit rating
  • Consider going with variable rate mortgages if circumstances warrant the added risk of facing interest rate fluctuations
  • Blend mortgage rates and receive a better average mortgage rate by having a portion of the mortgage fixed and the remaining portion variable; this should ultimately end up being a lower average rate than only having a long term fixed mortgage

Getting the best mortgage rate in most cases results in the borrower’s ability to negotiate with the lender or financial institution.  Negotiating a rate with mortgage agents or mortgage brokers is usually not needed as they in the majority of cases offer the best rate possible up front.  Negotiating a mortgage rate is extremely important, saving individuals thousands, and in some cases tens of thousands of dollars over the lifetime of a mortgage.  Individuals have no problems negotiating the price when they purchase a vehicle, but in many cases are not comfortable negotiating or asking for a better rate on a mortgage.  If people do not ask, in most cases they will not get a better rate. 

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Best Mortgage Rates

Variable Rate 1.94%
1 Year 2.34%
2 Year 2.14%
3 Year 2.44%
4 Year 2.49%
5 Year 2.49%
10 Year 3.84%

April 27, 2017

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