Originally, I was going to entitle this post, How To Get The Best Mortgage Interest Rate Possible. But after a couple weeks of battling, I failed to do such a thing due to a lack of convincing skills, poor timing and good old fashion bait and switching.
Before I tell you about my failure, let me tell you how I recommend getting the best mortgage rate possible. I’ve refinanced eight times across four properties over 16 years.
I never thought I would refinance again given we were in a rising interest-rate environment. The Fed decided to kill our expansion in 4Q2018 when they signaled a couple more rate hikes in 2019 and beyond.
It also felt good when I paid off my last property in 2015. With rising cash flow since then, I figured I would just pay off my 5/1 ARM that was set to adjust this summer to 4.5% from 2.5%.
But since the Fed backtracked, mortgage rates have collapsed in 2019 and will likely stay depressed for the foreseeable future. I figured it was worth refinancing again, especially if I could get a reasonable rate with all closing costs baked in.
In the end, I locked in a 10/1 ARM for 3% with -3.75 points equal to a $3000 credit towards closing.
This rate is pretty good, but I could’ve gotten better terms. This article will help you figure out what to do and what not to do to get the best mortgage rate possible.
How To Get The Best Mortgage Rate Possible
The key to getting a better price is to always generate competition. For example, the more employers compete for your services, the more you will get bid away for a higher salary.
I still remember sitting in the living room of a house I wanted to buy back in 2004. The asking price was $1.55 million and it had been sitting on the market for two months. I was tempted to offer $1.45 million, which is unusual in a market like San Francisco.
I had made up my mind to low ball the sellers when in walked a doctor couple at the open house. They sat in the dining room and marveled at the wainscoting, crown molding and high ceilings.
Suddenly, my desire to low ball faded away due to perceived competition. Instead, I offered $1.525 million, or $75,000 more than I had planned. I still wonder to this day if my emotions got the best of me. Thankfully, it all worked out in the end.
Here are the steps I take to get the best mortgage rate possible. Miss one step and your failure rate will go way up.