5 Effective Ways to Get the Best Mortgage Rates

Today’s Mortgage Rates

Last week the Fed announced another rate hike of .25%. As of today interest rates are at the lowest they have been since September at 4.75%, but that is going to change in the coming weeks. While rates may be on the rise, they are still quite low compared to average rates over the past 30 years.

Mortgage Rates

Product Interest Rate APR
30-year fixed mortgage 3.98% 4.10%
15-year fixed mortgage 3.44% 3.64%
5/1 ARM mortgage 3.78% 6.87%
7/1 ARM mortgage 3.91% 6.32%
30-year fixed jumbo mortgage 4.19% 4.31%
30 Year FHA mortgage 3.61% 3.67%
10/1 ARM 4.10% 5.86%
20-year fixed mortgage 3.98% 4.15%
30-year VA mortgage 3.65% 3.71%

Last update: 05/15/2019 at 6:30 AM

5 Effective Ways to Get The Best Mortgage Rates

A lower interest rate can save you thousands, even tens of thousands of dollars over the life of the loan.

.25 percentage points can save you thousands over the course of a 30 year loan.

So, how do you get the best mortgage rates?

Here are the simplest and most effective ways you can make sure you’re getting the lowest mortgage rates possible.

Rate Search: Check Mortgage Rates Today

1. Compare Rates with Multiple Lenders

how to get the lowest home loan rates

By applying with multiple online mortgage lenders you get to compare the different rates and fees lenders charge. Your interest rate and the fees involved will differ with each lender.

It’s a good idea to get at least 3 or 4 mortgage quotes.

Some buyers avoid doing this because they believe too many inquires will lower their credit score, however, this is not the case.

FICO allows for multiple credit inquires when consumers are shopping for a loan.

This is known as “rate shopping”. Consumers are allowed a 30 day window to have as many mortgage lenders pull their credit without negatively affecting their scores.

Use our loan comparison calculator to compare loan offers

2. Maximize your credit scores

tips to improve your credit score

Your credit score is the most important factor in determining your interest rate. The higher your credit score, the lower your rate will be.

You have to make sure your credit scores are as high as they possibly can be. You can pull your scores for free from Wallet Hub and Credit Karma.

Pulling your free credit scores will not harm your score. There are a few quick and simple ways your increase your credit score in a short amount of time.

Pay off your credit card balances

The amount of available credit you’re using on your credit accounts is called you “credit utilization ratio”.

Your utilization ratio makes up 30% of your total FICO score.

So, if you’re carrying a lot of debt on your cards, you’re killing your scores. Try to pay the balances off completely. If you can’t, at least get the balances under 15%.

Try to remove collection accounts

If you have an collection accounts on your credit, you need to try and have them removed. There’s a couple of ways you can do this.

First, you can dispute the negative account with the Credit Bureaus directly.

The Bureau will have 30 days to verify the account with the creditor or they must remove the account from your report.

Another method of getting collection accounts removed from your report is to negotiate a “pay for delete”.

This is an agreement between you and the collection agency that they will remove a collection account if you pay the amount owed.

These agreements are happening less and less but there are still debt collectors that will do this.

Get added as an authorized user

If you have a friend or family member with a credit card account that has been open for a while with positive payment history.

Have them add you to their account as an authorized user. When you’re added onto the account all of that accounts history will appear on your credit report.

Authorized user accounts are figured into the scoring algorithm and will increase your scores.

You do not even have to have your own card, the account owner can also just remove you as an authorized user after you close on your home.

More information on building your credit score fast.

3. Use the mortgage quotes to negotiate

negotiating the best mortgage rates

The lenders quote is not set in stone. Often times the loan officer increases fees and rates to increase their commissions.

Use the mortgage quotes you get to negotiate the best mortgage rates. Take a quote from one lender to another lender asking them to beat it.

Then take that quote to another lender, and so on. Do this until you squeeze every last bit of savings you can.

This is one of the most affective ways to make sure you’re getting the best mortgage rates available. You can not only get a lower rate, you can negotiate the closing costs and origination fees.

4. Apply for a Government home loan

Government backed mortgages are similar to conventional loans except for the fact the Government doesn’t insure them, which makes them slightly more risky.

Because the lender is guaranteed to get their money back if the borrower ever defaults, they come with lower mortgage rates than conventional loans do.

FHA Loans

FHA loans are one of the most used types of home loans today. This is mainly because of the flexible qualifying guidelines and low down payment requirements.

FHA loans are available with just 3.5% down with a 580 credit score or higher. FHA loans also have better loan rates than conventional loans.

VA Loans

If you’re a Vet then you should apply for a VA loan. VA loans have many benefits and are the cheapest mortgage there is.

These loans offer 100% financing, low mortgage rates, no PMI, and low closing costs.

Although just because a VA loan is the best deal on a mortgage there is, you still need to follow the tips in this article to get the best deal possible.

UDSA Loans

A USDA loan is a rural housing program created by the U.S. Department of Agriculture. These loans are for people in rural areas of the country.

USDA mortgages also offer 100% financing so no down payment is needed. Mortgage insurance and loan rates are also low for these types of loans.

Here you can read more about these rural development loans and check your USDA eligibility.

First time home buyer grants and programs

If you’re a first time home buyer there may be special programs you can qualify for. Check the HUD website and entering your state.

You can also check your local Government website to see if there are any local programs available. Just look up your city or county’s website and search for first time home buyer programs.

5. Look into an adjustable rate mortgage

If you’re planning on selling the home within 5 years, you should consider a 5/1 ARM loan. A 5/1 adjustable mortgage rate starts off low for the first five years.

Then the rate increases every year thereafter. If you’re really not sure how long you will be in the home, it’s probably best to just lock in a fixed rate since current mortgage rates are at all time low’s now.

Read more about 5-1 ARM vs 30 year fixed rate mortgages.

A 15 year fixed rate loan will have better rates, usually about a half a mortgage point to a full point lower than a 30 year loan.

Again, if the monthly payment is stretching it for you, stick to a 30 year fixed rate. You can always pay more each month to pay off your mortgage quicker.

Check out our article comparing 15 year vs 30 year mortgage loans.

The Bottom Line..

Getting the best mortgage rates on your loan can save you ten’s of thousands of dollars.

By comparing loan offers from multiple lenders and using the quotes to negotiate, you’ll get the best rates possible.

Make sure your credit score is as high as it possibly can be.

Pay down the balances on your credit cards and try to get your collection accounts removed.

The type of mortgage you get can affect your rate as well.

Get a quote on Government loans like FHA and VA, before moving forward with a conforming loan. Using the tips in this article you will be able to get the best deal on your mortgage.

Speak to lenders and and check current rates