We’ll begin with what always seems to be everyone’s number one concern, saving money. Similar to any other monthly payments you’re attempting to negotiate, it depends on a lot of factors.
But I can at least clear up a few items to give you an idea of how things will go. Ultimately, the more risk you present to the mortgage lender, the higher your mortgage rate.
So if you have bad credit and come in with a low down payment, expect a higher interest rate relative to someone with a flawless credit history and a large down payment.
This is to compensate for greater risk of a missed payment as data proves those with questionable credit and low down payments are more likely to fall behind on their mortgages.
The property itself can also affect mortgage rate pricing – if it’s a condo or multi-unit property, expect a higher rate, all else being equal.
Then it’s up to you to take the time to shop around, as you would any other commoditized product.
Two borrowers with identical loan scenarios may receive completely different rates based on shopping alone.
And someone worse off on paper could actually obtain a lower rate than a so-called prime borrower simply by taking the time to gather several quotes instead of just one.
For the record, a Freddie Mac study proved that home buyers who obtained more than one quote received a lower rate.
There is no single answer here, but the more time you put into improving your financial position, shopping different mortgage lenders, and familiarizing yourself with the process so you can effectively negotiate, the better off you’ll be.