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How to Refinance With Today’s Lowest Mortgage Rates

How Credit Affects Mortgage Rates

Want to know how to refinance with the lowest mortgage rates without paying unnecessary lender fees? If you’re in the market for a new home loan you might be disappointed to find that the refinance mortgage rates you’re being quoted by lenders like Amerisave are higher than what’s being advertised on television. There are a several reasons why this could be happening; however, there are steps you can take to improve the quotes lenders offer you. Here are several tips on how to refinance with the lowest possible mortgage rates without paying one cent in unnecessary fees.

How to Refinance With Today’s Lowest Rates

Did you know that the refinance mortgage rates you see advertised on television are based on having a lofty credit score of 820 or better? If you have less than perfect credit the interest rates you’ll be quoted will be higher than what you’re seeing advertised. Here’s a chart to illustrate how your credit score affects the interest rates you’ll qualify for when mortgage refinancing and how much you’ll pay for financing for the duration of the loan.

How Credit Affects Mortgage Rates

As you can see, the higher your credit score, the higher your refinance mortgage rates will be. Luckily, there are steps you can take to improve your credit score before applying for a new home loan, and you don’t have to be a finance guru to pull it off.

The first thing you’ll want to do before mortgage refinancing is take control of your credit. You don’t have to pay anything to get started; however, there are several paid tools that can make staying top of your credit easier. For example, I’m a member of USAA and they offer a low-cost credit monitoring service through Experian. I think I pay $12 a month for full access to all three credit reports (Equifax, Experian and Trans Union) as well as credit scores and monitoring from each. The service provides alerts when your credit reports are accessed or new information is added. Most credit Unions offer similar low-cost services. Bank of America and Wells Fargo have similar offerings; however, as always you can expect to pay more from a bank.

Your Credit Reports Are Free

Despite what those Free Credit Report dot websites tell you, all of your credit reports are available online for free without paying for some credit monitoring service. Several years ago Congress passed a law requiring all three credit bureaus to give you access to your credit file for free every year. The website you can access your credit reports on is AnnualCreditReport.com. They’ll still and try to sell you a credit score with your report; however, you don’t need to pay for this either as your lender will tell you your score. Once you have all three of your credit reports carefully review each one for mistakes or inaccurate information. If you find mistakes you’ll need to dispute the mistake with each credit bureau. Experian makes it easy to dispute mistakes online; however, Equifax and Trans Union still need you to write a letter.

Tips to Quickly Boost Your Credit Score

The most effective thing you can do to boost your credit score before mortgage refinancing is to pay down the balances on your credit cards. Don’t close accounts but try to carry a zero balance when possible. Also, avoid opening new accounts for at least 90 days before applying for a mortgage. Once you’re sure that you credit score isn’t holding you back we can get back to tips on how to refinance with today’s lowest mortgage rates.

Mortgage Rate Shopping Online

Shopping for refinance mortgage rates is a frustrating experience for many homeowners. Knowing how to refinance without paying junk fees is a common mortgage mistake overlooked by many homeowners. Qualifying for the lowest possible refinance rates at the expense of fees doesn’t automatically mean you’re getting a good deal. In fact, if you don’t recoup your out-of-pocket expenses from mortgage refinancing you’re actually losing money.

If you haven’t already answered the question “Should I Refinance,” now is probably as good a time as any. The easiest way to answer this question is to look at the benefit or refinancing as cost versus savings. Keep in mind that the average homeowner refinances every four years so you’ll need to recoup your out-of-pocket expenses long before to benefit from lower mortgage rates. You can calculate how long it’s going to take to break even on your closing costs by dividing your total out-of-pocket expenses including the mortgage origination fee by the amount you’ll be saving each month on your payments. This tells you the number of months it’s going to take to break even before benefiting from mortgage refinancing. If this time frame is acceptable for you then mortgage refinancing probably makes good sense in your situation.

Getting back to how to refinance without overpaying at closing; the best strategy for most is to enlist the help of a good broker. Finding the right mortgage broker eliminates the need for comparison shopping. Mortgage comparison shopping is very difficult to begin with as you can’t rely on the Good Faith Estimate to make an apples-to-apples comparison of fees from different lenders like Wells Fargo Refinance and Amerisave due to a lack of standards in the law protecting homeowners from predatory lending.

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You can learn more about finding the right broker to arrange your next home loan without overpaying at closing by checking out my free Underground Mortgage Videos.

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Here’s a quick sample to get you started learning how to refinance without those pesky lender junk fees…

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