Best Mortgage Refinancing Rates 5 Tips For Securing The Best Interest Rate

By Robbie T. James

If the conditions are right, mortgage refinancing makes sense for so many reasons. For example, people who choose to refinance their homes can end up with potentially significantly lower their monthly payments.

Refinancing your home loan can also result in your paying less money in interest over the course of the loan – to the tune of tens of thousands of dollars in savings.

And, there is the benefit of being able to “cash out” some of the equity in your home to be used for the purpose of making home improvements, paying down high-interest debt, or going on a much-needed vacation.

It goes without saying that if you are interested in refinancing, you are going to want to get your new loan funded at the best mortgage refinancing rates available in the market today. Here are 5 tips for securing the best rate:

1. The very best rates are reserved for only the most well-qualified borrowers:

You should know that the ability to be offered the best-possible mortgage refinance rates depends in no small part upon your credit score. Generally, people with “excellent” scores of 750-770 or above are offered the best rates. These people are considered to be in the highest tier of the credit score system.

2. If you do not have the highest tier credit score possible, you may have to pay points to qualify for the best rates:

If you have a “good” credit score of over 700 but not quite an “excellent” score, you can pay points (1 point = 1% of your loan principal) as a way of buying the better rate. Of course, this is more costly in the short term, but a quick calculation will tell you the break-even point (in months) beyond which paying a few points now makes sense in terms of total loan costs.

3. It pays to have a favorable debt-to-income (DTI) ratio and offer a significant down payment:

For anyone applying for a refinance loan regardless of your credit score, of course you will still want to be offered the very best-possible rate for your situation. One way to do this is to have a favorable debt-to-income ratio. Essentially, the more money you make, the more debt is allowable by lenders. But, obviously, having less debt is always better than more in their eyes.

4. For people with poor-to-good (but not excellent) credit scores, comparison shopping is the way to go:

If your score is in the poor, fair, or good range, you will benefit from shopping around. Even if you already have an offer in hand, it is quite likely that if you apply to 3-4 more lenders, you are going to get an even better offer. It is worth taking the time to look around.

5. Make sure to avoid accepting the first offer you receive:

When you get an offer, always go back and ask if the lender can do better for you in terms of the offer they have made you. Often, you may be surprised that they could come back and charge you fewer points or offer you a better rate. This is especially likely if you let them know that you have other offers in hand or are talking to other lenders.

Take these 5 tips into account as you shop for the best mortgage refinance rates.

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Source:

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