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7 Ways to Reduce Mortgage Rates

The cost of borrowing money is a big deal, especially regarding mortgages. The interest rates you pay on your mortgage can make or break the fact that you can afford the house you want.

Fortunately, several ways can help you lower your monthly payments. This article has all the ways you need from changing your mortgage terms to taking out an adjustable rate loan.

1. Higher credit score

Getting a lower mortgage rate gets easy when you have a higher credit score.

A credit score indicates how much risk lenders perceive in lending money to someone based on their ability to repay the loan. The higher the credit score- the easier it is to reduce the mortgage rate depending on the loan program you opt for.

2. Lower loan-to-value ratio

A lower loan-to-value ratio may also get you a lower rate. Abbreviated as (LTV), it is the ratio or percentage of the home's value that is borrowed. It is one of the most significant factors in determining your interest rate on future mortgage payments. For example, if you have $100,000 worth of debt on your house and only owe $70,000 in principal payments over 30 years at a 6% interest rate per year, you will pay about $4,900 for almost 70% LTV.

3. Bigger down payment

As surprising as it sounds, a higher down payment can help reduce the interest rate.

When opting for a mortgage, make a more significant down payment to reduce the overall interest rate. This will also allow your lender to minimize the commissions on the monthly mortgage payments.

More equity means less risk for lenders. If a homeowner has more equity in their home, they're less likely to default on payments or lose their house.

4. Suitable loan programs

A more considerable loan amount can reduce a mortgage's interest rate. To get a lower interest rate, you will have to find a way to reduce your monthly payments. Loan programs are an excellent way to pay less money on interest rates than smaller ones.

Such loan programs come with more significant loan amounts and reduced interest rates, which means less risk for lenders and investors. Another good way to reduce the risk is associating the loan with other collateral pieces. This means there's less chance of the borrower defaulting on his obligations.

5. Pay your bills on time

While it may sound simple, paying your bills on time is one of the best ways to reduce your mortgage rate. Not only does this help avoid late fees, but it also keeps track of what bills you have coming up. Here's how to do that:

  • Pay off high-interest debt.

  • Reduce the amount of money you spend on interest.

  • Reduce the amount of money you pay in taxes.

6. Make extra payments on your existing mortgage

Making extra payments on your existing mortgage is another helpful way to reduce the interest rates, also known as "extra payments".

If you have a home loan, consider making an extra payment every month or two.

Make sure that this money isn't earmarked for another purpose like paying off other debts). By doing this, To get started with making extra principal payments:

7. Ask your lender

It never hurts to ask for a lower mortgage rate from your lender. The easiest way to get a lower interest rate is by requesting your lender for this favor. If you're not sure how to go about this, ask if they can give you an interest rate reduction as part of their current program


Remember, you're not alone in your quest for a lower mortgage rate. Many people out there have the same goal of reducing their interest rates. The most crucial step is keeping your lender updated about everything you do; maybe they can grant you an interest rate reduction.

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