A First-Time Homebuyer's Guide, Start To Finish - The Strategic First-Time Homebuyer Book - Chapter 11 How To Lower Your Rate

April 28, 2026

r/NewbHomebuyer

......This is chapter 11, just scroll down a little beyond the intro and you'll pick up where you left off......

Hey guys, I spent a lot of time writing this book, and I had this subreddit in mind as I was writing it, so I thought I would post it here for you for free. If you want the physical book you can always go on Amazon, but here's my gift to you 😄

I'll include links so you can jump between chapters easily.

I hope you find it helpful.

The Strategic First-Time Homebuyer

Start to finish, with strategies to get approved and save thousands in interest, costs, and the down payment.

Introduction 1

Chapter 1 How Much Can I Afford? 3

Chapter 2 How Much Cash Do I Need? 16

Chapter 3 How To Find The Down Payment 30

Chapter 4 Your Debt To Income Ratio 41

Chapter 5 Choose Your Lender 69

Chapter 6 You’ve Been Denied (Your Credit) 80

Chapter 7 Selecting a Real Estate Agent 90

Chapter 8 Shopping For a House108

Chapter 9 Under Contract: Inspections and Appraisals 121

Chapter 10 Under Contract: Rate Lock and Underwriting 129

Chapter 11 How To Lower Your Rate 144

Chapter 12 Closing 163

Chapter 13 Post Closing 171

About the Author 190

Glossary 191

Chapter 11

Alright, here are the big strategies that will save you thousands of dollars, and over a long period of time, maybe even hundreds of thousands.

Here are the strategies I’ll cover

● Buydown (yes, I’ll cover this one more time)

● Swap Out Equity

● Market timing

● First-Time Buyer Status (LLPA Waivers)

● Your Income

● Increase Your Credit Score

● Rapid Rescore

● Shop Lenders

Buy Down Your Interest Rate

Like we’ve covered earlier, you can spend money up front in the form of points or origination fees in order to get a lower interest rate.

Here's an example:

(Very hypothetical, not today's rates)

Consider it a menu of rates. Here’s the chart

Rate	Cost
8%	$0
7.5%	$2,000
7%	$5,000
6.5%	$10,000

The lender you work with will have a chart like this.

It won't have the same rates, and it won't have the same costs.

In this scenario, rather than pay an 8% interest rate, you can add $2,000 to your closing costs and snag a 7.5% interest rate.

Ask your lender for their rate chart, see if anything on their chart would be worth the cost.

Swap Equity

You can do this by exchanging a higher appraised value for seller concessions.

If your appraisal comes in high, you might be able to take advantage of it to lower your interest rate.

Let's pretend the appraised value comes in at $510,000 but you're under contract for a $500,000 purchase price.

You can write an addendum that makes you pay the full appraised value ($10,000 higher than the original contract price), but in exchange the seller will give you $10,000 in a closing cost credit, which you can use to lower your rate.

In that chart above, I showed a 6.5% costing $10,000

So rather than pay an 8% rate, you can use a seller credit to secure a 6.5% rate.

The tradeoff, you're going to have a loan amount that is about $10,000 higher, which will raise your payment a little bit. But the lower rate might have a bigger impact.

In this scenario the seller gets close to the same dollar amount in the net.

Builders kind of do this already.

Builders have learned that they can make a home more appealing, and more affordable if they give you large concessions (seller credits).

Dollar for dollar, the effect it has on your payment is much more substantial than getting a lower purchase price.

The catch is they usually require you to use a specific lender.

Market Timing

Rates change every day. It can behave erratically like the stock market.

I look at it like the weather, because I'm constantly looking at this information.

You can kind of get an idea of patterns, and you could guess sunshine most days in an Arizona summer. But every once in a while, people get it wrong.

Here's what affects mortgage rates:

● Inflation Data

● Labor Market Data

● Investor Behavior

Inflation Data

Not a lot of people watch rates the way I do, but you may notice a trend with gas prices. When oil prices go up, so do mortgage rates. When gas goes down, so do rates.

It’s not the sole indicator, and I wish it were that simple. There’s more to inflation than gas.

Think CPI reports and other cost of goods reports.

Labor Market Data

When people lose jobs, or are unemployed for a long time, it helps mortgage rates go down. The expectation is that the Fed will try to stimulate job growth by lowering rates.

When the labor market grows, rates tend to go up too.

Here are the reports that the Fed watches:

● jobless claims reports

● new jobs added

● payroll reports

It isn’t just the Fed watching these numbers. Investors are watching these numbers as well, and move money around in anticipation of what the Fed might do.

Investor Behavior

Rather than watching gas prices, inflation, or labor markets, you could watch the 10-year treasury bill instead.

The 10-year bond is a similar-enough investment vehicle to the mortgage-backed security (people invest in buying mortgages, and the average time for someone to have a mortgage is 7–10 years)

When the 10-year bond rates go lower, mortgage rates go lower as well.

When there is a bond auction, if there is a large ‘appetite’ for the 10-year bond, more money flows into it, and when money flows into it, rates go lower.

Investor behavior affects this part.

If you want an idea of where rates are going, look at the 10-year bond.

You Can’t Really Time The Market

When you only have a week or two to decide whether or not you want to lock in a rate, it makes it much more complicated.

It's easier to watch longer trends and say "next year, rates should be around here."

But day-to-day, if an inflation report comes out tomorrow, and the report looks bad, it could cost you a lot of money if you decided not to lock.

So rather than worry about everything that I mentioned about timing the market, here's what you should look into doing.

Use Rate-Locking Strategies Instead

Lock whenever you can.

Locking in a rate protects you against rising interest rates while you're under contract for a home.

Check if the lenders you are working with offer certain rate-lock features

Lock and Shop

“Lock and shop” means you can lock in your rate while you shop for a home. Not a lot of lenders offer this, but if you talk to one that does, see if you can lock in a rate over 90ish days as you search for your home. During those 90 days, rates can creep up. But if you've locked it in, you won't have to worry about that.

"How'd you get that rate? Rates are 1% higher?"

"I locked it two months ago." Now you look like a genius.

Rate Renegotiation

If you've locked in a rate, and rates plummet due to some report (check the 10-year treasury yield, see how much it drops to give a clue if it's worth looking into) then check if your lender will still lower your rate. This is called a float down, or rate renegotiation.

Change Lenders

Check if a mortgage broker will transfer your loan to another lender.

If you're working with a mortgage broker, and if you've locked in a rate, but see that rates fall, see if that broker will help you transfer your loan to a different lender with a better rate. (If the current lender will not renegotiate).

Brokers have this ability because they represent several mortgage lenders.

So rather than time the market, lock when you can, and make sure there's room to pivot if rates drop.

I've seen this tactic protect buyers from getting hit with a 0.5% higher rate during volatile markets.

First-Time Buyer Status (LLPA Waivers)

As a first-time buyer, you could possibly get better rates than a second-time buyer.

But your income could negate that benefit. (If you make too much money.)

Your Income

As long as your income is at 100% or below the AMI (area median income) for your county (or 120% in HCOL areas), then you will get a better interest rate.

Here's how to see what the AMI is in your area:

ami-lookup-tool.fanniemae.com

If your income is at 80% or lower for the AMI in your county, you may get even better rates than that.

Something that a lot of loan officers don't know is that this is qualifying income not total income.

Say you and your spouse want to be on the loan, but together you make 160% of the AMI.

You wouldn't get a better interest rate because you make too much money.

Here's the fix: Lower your qualifying income.

As long as you can still qualify for the mortgage, just remove an aspect of the income that puts you above the limits.

Here’s an example:

You and your spouse make 160% of the AMI, but you can qualify for a mortgage with just your income. (Pretend your income lands you right at 80% AMI.)

You don't need to remove your spouse from the loan, just cut the income from the application.

That way, you can lower your qualifying income to snag a better interest rate.

Here’s a bonus example:

You can do this with certain aspects of your income too.

Say you make over 100% AMI with salary + bonus, but if you removed your bonus income, and if your salary lands right under 100% AMI, then you can cut your bonus income from the application.

As long as you can still qualify for the mortgage, then use the minimum amount of income needed to get the best interest rate.

I've seen this tactic save buyers 0.375% on their interest rate.

Increase Your Credit Score

Interest rates, and the costs for interest rates, are determined in tiers of 20 (700–719, 720–739, 740–759, 760–779, etc.).

Once you get to a certain level, any improvement on your score might not make a difference.

Say your score lands at a 719 and you're 1 point away from better rates, here's what you can do.

Ask if the lender will re-pull credit.

Depending on how much time you have, you might be able to pay down a credit card balance and increase your score.

If the credit card company reports the new lower balance well before your scheduled closing, you might be able to take advantage of a higher score and lower rate.

If you have any collections that were placed by mistake or surprise, look at paying it off with an agreement to delete the collection upon payment.

Delete it like it never happened.

That reports quickly.

Once that's removed from your report, you should see your score jump, and your interest rate drop.

I’ll give you a real example:

I had a collection account after I moved addresses. It was my internet bill.

I did my part and called them before moving. I asked “Do I owe you anything? Am I clear?”

The representative said I was fine, so it was out of my mind.

Then Credit Karma told me that I had a collection account.

My score had dropped from somewhere in the mid-to-high-700s to 660.

A brand new collection dropped my score by about 100 points!

I called the collection agency. They told me I owed a stupid small amount like $100.

So I either asked or told (I was polite) “If we can delete this collection account like it never happened, I’ll pay right now.”

The important part is deleting.

If they only mark it as paid, then your score will continue to suffer.

It needs to be wiped out like it never existed.

They agreed to delete it, they sent me a letter for confirmation, and my score went back to its previous number.

Your loan officer will have your credit report. Ask for a copy of it (they’re charging you for it, over $100, so you’d better get a copy.)

Review it, check for higher credit card balances, mistaken collections, or anything else you might be able to do to get your score to the next tier up.

Rapid Rescore

If the credit card company or collection company will take too long to report it to the bureaus, then check if your lender will do a rapid rescore.

With a rapid rescore, you pay off the balance, you get a letter from the creditor stating the new balance, and you get a new credit score in a week or two.

Depending on the jump in score, you may be able to save 0.125% - 0.5% on your rate.

Shop and Negotiate With Lenders

A lot of people get squirmy when it comes to negotiating.

But here’s the easy part: all loan officers are selling the exact same thing.

It’s not like they’re selling a product that has different terms.

If you’re looking for a 30 year conventional mortgage, then one loan officer’s 30 year conventional mortgage won’t have different terms.

They’re all fixed for 30 years.

So I’ll walk you through the easiest way for you to compare a lender’s offer with another.

So it comes down to numbers: Rates and lender fees.

“But I don’t want everyone pulling my credit.”

You might say.

That’s valid, except here’s a tip about shopping for a loan:

The credit bureaus want to make a lot of money.

They charge lenders for credit reports, and they encourage you to get your credit pulled more. So they’ve made a rule that if you get your credit pulled for the exact same product (like a mortgage) within 14 days, it won’t impact your score.

So once your credit is pulled, you have two weeks to check out other lenders and their offer without getting your credit dinged or donged.

Quote Using The Same Document

Your job is to keep the offer as “apples to apples” as possible. Here’s what I mean:

If one loan officer is using their own spreadsheet, and the other officer is using his own software, you’ll see different formats, and it will be confusing to tell whose fees are higher.

But there is a document that all lenders legally need to provide, and that’s the official loan estimate.

Comparing the same document between two lenders simplifies the shopping process.

But there’s more you can do to make it easier to compare.

Quote The Same Product

If one loan officer is showing you a conventional mortgage and the other is showing you an FHA loan, it’ll be impossible to tell which lender has better rates.

Have the loan officer make their case for why FHA is better, and if you agree with it, then have the other loan officer give you an official loan estimate for their FHA loan too.

Quote The Same Rate

This might confuse people, because you thought we were shopping rates. How can you shop rates if they offer the same rate?

Remember that menu of rates that I covered earlier? It’s the chart that shows you which rate comes with a buydown cost, and which rate doesn’t.

Each lender has their own chart. Let me give you an example:

Lender 1’s Chart

Rate	Cost
6.625%	$0
6.500%	$1,000
6.375%	$3,000

Lender 2’s Chart

Rate	Cost
6.750%	$0
6.625%	$1,000
6.500%	$3,000

It would be pretty safe to assume Lender 1 has the better offer.

If you were to ask a lender if they have a better rate than 6.625% then the lender might take advantage and assume you don’t know about buydowns, and say “I have a 6.5%.”

But you know what to check.

Make them both quote you at the 6.625% and you’ll see that Lender 1 is charging $0 in buydown, while Lender 2 is charging $1,000 for the same rate.

You just saved $1,000. How does it feel?

Let’s say you’d rather have the lowest rate, and you’ve budgeted about $3,000 in buydown costs. You’ve already established Lender 1 as the better offer, so then you ask, “can I have a rate with about $3,000 in buydown cost?”

With Lender 1, you can get 6.375% while Lender 2 was offering 6.5% at the same cost.

Lender 1 saved you 0.125% on your rate.

That’s how you can shop rates. First you shop lender fees, determine who the better lender is, and then you can drop the rate with the better lender.

Now let’s take it a step further.

You might assume that Lender 1 has the better offer, but we need to look at the numbers more carefully.

On page two of your official loan estimate you will see your closing costs itemized.

Don’t get confused here, because some lenders will overestimate property taxes or homeowners insurance. Don’t hold that against them. Those costs will be the same, regardless of the lender. So you can’t say “Lender 2 has better homeowners insurance, I’ll go with Lender 2.” That wouldn’t make sense because the lender doesn’t pick who you use for homeowners insurance. You pick that.

So you’ll compare only 3 sections:

Section A
Section B
Section J

Let’s say both lenders are quoting the 6.625% rate.

Lender 1

Section A:

● $3,000 Origination fee

● $1,200 Underwriting fee

● $0 Points

Section B

● $600 Appraisal

● $700 Processing

● $200 Credit Report

Section J

● No lender credits

Lender 1’s total: $5,700

Lender 2

Section A:

● $0 Origination fee

● $1,100 Underwriting fee

● $1,000 Points

Section B

● $600 Appraisal

● $0 Processing

● $135 Credit Report

Section J

● No lender credits

Lender 2’s total: $2,835

When you zoom out you’ll see that Lender 2 actually has the better offer.

Some lenders will hide the fact that they’re charging an origination fee, but not buydown points. So you’ll want to add it up like this.

Lenders might not charge a fee in one place, like points, but they might make up the cost elsewhere by charging an origination fee.

Remember: have the lenders quote the same rate, the same product, get a loan estimate, and compare sections A, B, and J on page 2.

One More Step

If you want to take the negotiating an extra step, do a little back and forth.

Send the competing loan estimates to the competing lenders. Show them “This is what I was offered, would your company be able to offer anything lower?”

If they do, then you send that Loan Estimate to the other competing loan officer.

Make sure they’re sending loan estimates, not just promises.

The back and forth will frustrate loan officers, but if you’re up front with them from the start, telling them “I’m shopping around, looking for the best offer.” Then they’ll be more understanding, or at least they should be.

How I Would Shop

I don’t like shopping much. I tried it once for solar panels. I picked the more affordable option (same product) and it also came with a roof warranty, so I picked it.

The company ended up going bankrupt mid-project and I had to pay extra to finish it.

You’ll want to vet the lender’s ability as well.

If your lender came with a recommendation from your agent, then I’d lean toward that lender, just because there’s real proof that the specific loan officer can deliver.

I would probably do one round of shopping, see what’s out there, then pass that loan estimate to the recommended lender and ask if he can match.

If he can match, then I’d be done.

I don’t like the back and forth, and I’d want to make the decision within a day or two of being under contract.

I don’t like making people do a lot of work for nothing. So I’d keep it quick.

One more tip:

Don’t worry about hurting people’s feelings. The loan officer you don’t pick will cry a few tears, and will forget about you the following day.

And one last tip:

If you don’t know where to shop for loan offers, visit tools.newbhomebuyer.com/loanshop, and ask for a second opinion.

By doing these steps, you’ll end up with a much lower rate, saving you thousands in interest, or you’ll save thousands of dollars in up front costs.

When you buy your house, I want you to celebrate hard for me. Get that fancy food or drink because you saved thousands of dollars by reading a book.