A lot of baby boomers who get a new mortgage or refinance an old one simply accept the terms the lender offers. That is probably a big mistake.
Just 31% of boomers negotiated the mortgage rate that their lender initially offered, according to a recent LendingTree survey of 1,000 adults between the ages of 21 and 75, along with 200 members of Generation Z. That makes boomers the generation least likely to negotiate.
Yet among borrowers of all ages, 80% who negotiated were successful in their efforts.
In a summary of the findings, Jacob Channel, LendingTree senior economist, says failing to negotiate can mean leaving a lot of money on the table.
“If you successfully negotiate a lower rate — even a modest one of around a quarter of a percentage point — you could potentially save tens of thousands of dollars in interest over the lifetime of your loan, depending on factors like the size of your loan and the specific mortgage rate you received.”
Channel adds that your odds of successfully negotiating a lower rate improve if you have a high credit score and little debt. Yet among borrowers of all ages, 80% who negotiated were successful in their efforts.
According to LendingTree, a mere quarter-point reduction — from 6.5% to 6.25% — on a 30-year fixed-rate mortgage can result in the following savings.
- $57 a month
- $684 a year
- $20,520 over the life of the loan
It is worth noting that younger borrowers appear to be especially likely to succeed in negotiating a lower rate. The most successful negotiators include members of Generation Z (88%), parents with children younger than 18 (83%) and millennials (83%).
However, that doesn’t mean boomers shouldn’t try, especially if they have deep pockets: 84% of borrowers of all ages who make six figures or more are successful when negotiating a lower rate.
So, if you are shopping for a home, don’t forget to stop by Money Talks News’ Solutions Center and find a great mortgage rate.
And once you do find a terrific mortgage rate, prepare to try to negotiate that number even lower.
