I understand why you'd want to lower your rate. It could help you pay off your mortgage 7+ years faster by dropping the rate a full 1%. and in a lot of cases save over 6 figures worth of lifetime interest.

It's worth it!

So it makes me excited to share this one with you all.

Here are all of the strategies I can think of for you to use to get yourself a lower mortgage rate.

I first need to mention that this doesn't apply to everyone.

Who this doesn't apply to

If you need down payment assistance, you are stuck with a specific program, and there isn't much flexibility with interest rates.

If you have bad credit, it's hard to negotiate a lower rate when you don't have very many people that can help you.

If you can't qualify the conventional/FHA/VA/USDA route. Like bank statement loans. Not a lot of people offer these niche lending options.

Who this applies to

This should apply to a large majority: buyers who have decent credit and some money saved for a down payment and closing costs. And you can qualify for a conventional/FHA/USDA/VA mortgage.

The great thing about what I'm going to share is that you can stack all of these strategies on top of each other.

By the end of it, you'll be coming away with a rate that will have people asking you "how'd you get that rate? I bet you went with a builder, didn'tcha?

and you'll reply "I didn't, it was pure strategy"

If you already have a mortgage

If you've already finalized your mortgage, then there isn't much you can do for your rate besides refinancing.

Here are my thoughts on how you should approach a refinance.

Everything below is for those who are home shopping

If you're in the middle of purchasing a home, you'll have some time to pick your financing options, and you'll have a little time to hash out your strategies.

Here's the easiest one first (easiest to explain)

Buy down your interest rate

You can spend money up front in the form of points or origination fees in order to get a lower interest rate.

Here's and example (very hypothetical, not today's rates.

Consider it a menu of rates

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 a higher appraised value in exchange 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 for the full price ($10,000 higher), 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 pay about $10,000 more on your loan, which will raise your payment a little bit. But the lower rate might have a bigger impact.

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 requite 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 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 (think CPI reports and other cost of goods reports. If inflation goes up, rates go up)
• Labor market data (jobless claims reports, new jobs added, payroll reports. Growing labor market = higher rates)
• Investor behavior/10 Year Treasury Yield: 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.

When you only have a week or two to decide whether or not you want to lock in a rate (here's more on rate locking) 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.

Don't time the market

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

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

1. 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 two months ago" Now you look like a genius.
2. 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.
3. 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.

Your status as a first time buyer

As a first time buyer (2025) 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, then you will get a better interest rate. (or 120% in HCOL areas)

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

https://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.

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.

Bonus:

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 borrowers 0.375% on their interest rate.

Negotiating between lenders

I've posted this a while ago, but here's my advice on how to negotiate between a couple of lenders to get the best mortgage rate.

Here's another one I posted on how to make sure you aren't being taken advantage of, but really covers the same idea.

The gist of it is:

1. have them quote in the same format (an official loan estimate)
2. have them quote the same product (Conventional, 30 year fixed, etc)
3. have them quote the same rate (remember that menu of rates? That chart that showed buydown costs? All lenders can offer the same rate, but whoever has the lowest origination fees, or the most attractive rate menu, wins)

Use all of this to decide who has the best offer. I've seen people save big on this, like 0.375% - 0.5% on the interest rate just by doing a quick comparison.

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 repull 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.

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 maybe be able to save 0.125% - 0.5% on your rate.

Summary

There are a few strategies that should save you thousands in upfront costs as well as thousands on the backend of total interest paid over the life of the loan.

Pick and choose which ones fit your scenario the best.