How to Find a Lower Home Mortgage Rate
- 1). Assess your current situation. Your ability to find a better rate on your mortgage will depend on your current rate, credit history, the amount of equity in your home and whether you are able to document your income. If you have good credit, enough equity in your home and stable income for the last two years, begin searching programs to lower your rate. If you are unsure, contact a mortgage company and explain your situation.
- 2). Determine the equity in your home. The amount of equity in your home will play a part in your ability to lower your interest rate as it may dictate the amount your loan size. To determine your equity, subtract the amount of your mortgage from the estimated value of your home. For example, if you home is worth roughly $100,000 and you owe your lender $60,000, you have $40,000 in equity. If you don't know the value of your home, calculate the basic appreciation using the date you purchased your home as a starting point. Residential real estate, in stable markets, appreciates roughly 3 percent per year. If you purchased your home two years ago for $150,000, for example, it is likely worth approximately $160,000. You may also do an online value search (see Resources).
- 3). Compare your rate with what's available in the market. Call the lenders in your area and ask them to quote you conventional rates on the type of loan you are interested in (15-year fixed, 30-year fixed, etc.). Most lenders also list their daily mortgage rates on their websites, while online searches will also produce lists of current mortgage rates (see Resources).
- 4). Consider asking for a loan modification. If you are unable to qualify for a new conventional or government-backed mortgage, your current lender may be willing to modify your loan and lower your rate without the need to refinance your property. Decide on an interest rate and monthly payment you are willing to pay and pitch it to your lender. Your bank will either accept your proposal or make a counteroffer. You may be required to prove to your bank you are unable to make current payments because of a financial hardship.
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