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Mortgages: How to Get the Best Deal

I bought a house about three weeks ago. Since then interest rates for mortgages have fallen to a new historic low. I know it's impossible to time the market, but I can't help but feel like I could have gotten a better deal if I had just waited to buy until the Fall. My only solace is that I learned that home loans are somewhat flexible and so-called "locked rates" can be adjusted down for little or no fee.

According to Bankrate.com, the benchmark conforming 30-year fixed mortgage rate recently set a new record, dropping to 4.16 percent. Folks looking for a 15-year fixed rate mortgage can lock one in for just 3.37 percent.

When I started looking at mortgages, the rate for a 30-year fixed rate loan was well above 4.5 percent. At the time, I couldn't believe how cheap it was to borrow money. I was desperate to lock in this rate. So I aggressively started house hunting and soon found a home I loved.

As the summer months passed by, my purchase got delayed and my mortgage lock expired. At first I panicked. But then I realized that I was actually coming out ahead since interest rates were even lower. But soon even my new deal started to feel expensive as rates continued to fall. Friends and relatives started nagging me to dump my lender and get a new, cheaper loan elsewhere. But I just couldn't stomach going through the application process again, especially when we already had a commitment letter.

Then, just a few days before my closing I decided to call my lender and see if it could lower my rate. To be honest, I thought this was pointless. But to my surprise, I was told that the bank could do this. The only catch was that I would have to pay a fee. I believe it was a quarter of a point. Even with the penalty, I figured out that I would still come out ahead over time. (It would take me nearly five years to recoup my money.)

Then I decided to see how far I could push my luck. I called my mortgage specialist and explained to him that I'm a very good customer -- I have multiple accounts with the bank -- and asked if there was any way the fee could be dropped. To my complete shock, a supervisor decided to waive the penalty and in about 24 hours I had a new competitive interest rate on my loan.

So I guess looking back I shouldn't be too disappointed. My interest rate is just a tad above where rates are today. And my situation could have been a lot worse if I hadn't requested the rate adjustment. More importantly, I learned that it's always a good idea to ask a bank to bend its rules. You just never know what can happen when a lender tries to keep your business.

Are you in the market for a new home and watching interest rates closely?

Stacey Bradford is the author of The Wall Street Journal Financial Guidebook for New Parents.
Front Door image courtesy of Flickr, CC 2.0.
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