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With mortgage interest rates falling, homeowners are looking for ways to reduce their monthly payments. Refinancing is still very popular, but a lesser-used trick could also save you hundreds each month: mortgage rate changes.
The best part? All you have to do is ask.
The average rate on a 30-year fixed mortgage is 6.21% as of December 18, 2025, up from more than 6.74% in December of last year (1).
With this in mind, homeowners can request a mortgage rate modification. This is an agreement between a borrower and his or her lender to adjust the interest rate on a loan without a full refinance.
Unlike refinancing, which involves replacing your existing mortgage with a new one (often with different terms and costs), a rate change simply alters the interest rate on your current loan, lowering your monthly payments and reducing interest over the life of the loan.
Mortgage rate changes are generally associated with loan modifications designed to help borrowers avoid default or foreclosure. Some lenders proactively offer rate modifications to retain good customers when market rates decline. But do you really want to wait for the lender to make the first move?
Before approaching your lender, understand the terms of your existing loan, including the interest rate, remaining balance, and any clauses related to modifications or prepayment penalties.
You may also benefit from researching rates before deciding whether a modification or refinance is the best option for you.
For example, according to Freddie Mac research, borrowers who approached different lenders and got two or more quotes saved between $600 and $1,200 a year compared to people who refinanced their mortgages with their current lender. Over the life of your mortgage, this number can generate substantial savings.
Knowing current mortgage rates will strengthen your position when negotiating with any lender.
If you later decide that a rate change is the right decision, your next step is to contact your loan officer or customer service representative to explore what’s possible. Be prepared to demonstrate your good credit score and your consistency with on-time payments, as lenders are more inclined to accept reliable borrowers.
Finally, it’s time to negotiate terms. Be prepared for rejection. After all, the lender has your agreement and is not obligated to change the terms. But if your lender is willing to accept it, be prepared to discuss the potential fees associated with the modification. While some lenders may charge a nominal fee, it is often significantly less than the costs associated with refinancing.
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Although interest rates are falling, they remain relatively high, so homeowners with mortgages set at higher rates will benefit significantly from a lower rate. The typical costs and hassles associated with refinancing (closing costs, appraisal fees, and extensive paperwork) are enough to make anyone look for something better.
A change in tariffs circumvents many of these obstacles. Since you are simply adjusting the terms of the existing loan, the process is usually faster, cheaper and involves less paperwork.
Obtaining or making changes to your mortgage can have long-term implications, so it might be worth speaking to a financial advisor to create a plan or learn about all your options depending on your goals.
If you need help finding one, Advisor.com connects you with vetted fiduciary financial advisors near you. All you have to do is answer a few simple questions about your finances and Adivsor.com will connect you with a certified expert that fits your needs and situation.
You can then schedule a free, no-obligation consultation to see if they are the right fit for you.
Here’s why it’s worth asking your lender.
Let’s say you have a $300,000 mortgage with a 30-year fixed rate of 5%. Your monthly principal and interest payment would be approximately $1,610. If market rates go down and your lender agrees to change your interest rate to 4%, here’s how the numbers change:
New monthly payment: Approximately $1,432
Monthly savings: $178
Annual savings: $2,136
While typically lower than refinancing costs, some lenders may charge a fee to modify the loan. Make sure savings exceed expenses.
Second, confirm that the other terms of the loan remain the same. Some lenders may attempt to adjust other aspects of the loan during the modification. Plus, unlike refinancing, a rate change generally doesn’t require a strict credit check and shouldn’t affect your credit score.
In short, refinancing may be more expensive than you think. On average, the total cost of refinancing can range from 2% to 6% of the total loan amount.
If you’re thinking about buying a home now with the hopes of refinancing in the future, it may not be the bargain you think. Rather, you could save substantially by simply doing a little research to try to get the best possible quote for your new mortgage.
According to a report from LendingTree, shopping for a mortgage can help you save an average of $76,410 over the life of a 30-year fixed-rate loan.
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Federal Reserve Bank of St. Louis (1)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
