Are you shopping for refinance rates from today’s best mortgage lenders and are frustrated to find your quotes are higher than what’s being advertised? There’s more to getting the best deal on your next home loan than just refinance rates; fees make or break the deal you’re getting. Here are several of my best tips to help you get the lowest refinance rates without paying unnecessary fees or discount points.
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Refinance Rates Fluctuate Daily, Hourly
Mortgage refinance rates are a function of the market. On the plus side they can’t be manipulated, the downside is that timing the markets is next to impossible. There are however steps you can take to make sure you’re getting the lowest refinance rates and lender available.
4 steps to the lowest refinance rates
- Boost Your Credit Score
- Shop For The Best Mortgage Lenders
- Compare Refinance Rates & Fees
- Lock Your Refinance Rates Smartly
If you haven’t checked your credit reports in a while your first stop before refinancing needs to be the government mandated website AnnualCreditReport.com. Carefully review all three of your credit reports for mistakes. If you find errors use the online dispute found on the Equifax, Experian and TransUnion websites.
Once you’re certain that your credit files are correct you can give your score a shot in the arm by paying down the balances on your credit cards below 30% of your limit. Avoid applying for ANY kind of credit while shopping for refinance rates.
Some homeowners would rather have a root canal than shop for mortgage refinance rates. Some choose to refinance with their bank just as a matter of convenience. Shopping around will not only help you nab the lowest refinance rates but allows you to pay less at closing.
Don’t rely on the Annual Percentage rate when choosing a mortgage lender. APR is manipulated and the home loan with the lowest APR usually comes with the highest out-of-pocket fees. Use section 800 from your Good Faith Estimate to compare things like loan origination fees across different lenders.
Don’t be afraid to question any of the fees your lender charges and keep an eye out for junk fees. Lenders cook up all kinds of clever names for many of their fees just to confuse you; keep an eye out for anything resembling administrative, processing, rate lock, or courier fees. These are unnecessary fees that you can negotiate to pay less or not at all.
Before you do any refinance rate shopping you need to choose a mortgage program and stick with it. Do you need a low payment that never changes? If so, 30-year fixed refinance rates are for you. Think you’ll be moving within five years or so and want the lowest possible payment? Consider a 5/1 Adjustable Rate Mortgage. The point is you need to decide which mortgage program is right for you before doing anything else.
One of the most common mortgage mistakes is comparing loan offers from different programs. Don’t let a fast talking broker confuse you by quoting refinance rates on a 5/1 ARM when you’ve decided 30-year fixed is right for you.
Your mortgage rate lock is the lender’s promise to give you a specific refinance rate for a length of time needed to close. Keep in mind that many lenders are taking 60+ days to close and plan accordingly. If your rate lock expires don’t expect your lender to honor you refinance rates. (there are a few out there that will)
The duration of your rate lock also affects your refinance rates. The longer your rate lock the higher the impact on your refinance rates.
How to win the mortgage rate lock game
Winning with your refinance rate lock isn’t hard. What you need to know is that rate locks come in 15 day increments. Your choices range from 15 days, 30 days, 45 days, 60 days, and onwards and upwards.
Remember the longer your lock period the higher your refinance rates and payments will be. You need to have a conversation with your loan originator about the time it’s taking to close when refinancing and factor that into your decision when choosing from today’s best mortgage lenders.
Choosing the lender with the shortest closing time could win you as much as ¼ point on your refinance rates. Locking smartly could save you $20 a month on a $200,000 home loan.
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