Everyone wants the lowest refinance rates for their home loans but how do you go about getting them? You might be disappointed to find the quotes you’re getting are higher than the mortgage refinance rates lenders are advertising. The culprit could be your FICO score; however, there are other factors that could be keeping you from today’s lowest refinance rates. Here are several tips before you refi to help you get the lowest refinance rates for your next home loan:
The first thing is you need to have good credit – that’s a no brainer. The higher your credit score, the less interest you’ll have to pay. One thing to remember about credit scores is that small differences can have a significant effect on the interest rate you get. Lenders rank credit scores in tiers, or brackets. If you’ve already got decent credit, moving up or down into the next tier will make a difference of about 0.2 percentage points on the interest rate for a 30-year mortgage – for example, 4.4 percent instead of 4.6 percent.
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Remember there’s more to your mortgage refinance than getting the lowest refinance rates. The fees you pay when mortgage refinancing actually decide how good of a deal you’re getting because you have to recoup your out-of-pocket expenses before benefiting from your lower payment amount. The more you pay closing on your mortgage refinance the longer it takes to break even; however, you can cut the time it takes breaking even by avoiding lender junk fees and making sure you’re not overpaying the loan origination fee.
One of the most common mortgage mistakes is overpaying the broker for arranging your home loan. How much should you pay your broker for their work? A reasonable amount to pay for mortgage loan origination is one percent of your home loan, even though some brokers charge as much as 2-3 percent.
You can learn more about taking advantage of today’s lowest mortgage refinance rates without overpaying at closing by checking out my free Underground Mortgage Videos.
My name is Rob Regehr and I’m a personal finance writer with a chip on my shoulder for banks and brokers that take advantage of my friends and neighbors.
