Sure, getting the best refinance mortgage rates is important. One of the most common mistakes you can make is paying unnecessary fees to get lower refinance mortgage rates. Here are several easy tips to help you pay less for your next home loan from today’s best mortgage lenders.
Shopping For Refinance Mortgage Rates
Getting the lowest refinance mortgage rates is important because you want the lowest monthly payment. Shopping around for lower refinance mortgage rates and fees is the best way to make sure you’re paying less for your home loan than your neighbors. Here are 3 easy tips to get you started.
- Check Your Credit Reports First
- Request Refinance Rate Quotes The Right Way
- Use The Good Faith Estimate To Compare Lender Fees
Before you do anything else you want to make sure that negative or inaccurate information in your credit reports won’t stop you from qualifying for the lowest refinance mortgage rates.
When is the last time you visited AnnualCreditReport.com? The law requires the three credit monitoring bureaus (Experian, Equifax and TransUnion) to give you a free copy of your credit reports every year. You won’t get a credit score without paying for it; however, you can get free access to your TransUnion credit score with no strings attached at CreditKarma.com.
If you find inaccurate or outdated information in your credit reports each of the credit bureaus has a way to file disputes online. You’ll need to allow enough time for the correction to be reflected in your credit score before you start shopping for refinance mortgage rates.
Comparing quotes for refinance mortgage rates from different programs will not give you an apples-to-apples comparison of fees. Once you’ve decided which mortgage program is best for you stick with it and don’t let loan officers quote refinance mortgage rates across different programs. Also, make sure the quotes you’re getting don’t include discount points.
Paying discount points only benefits the lender and makes recouping your closing costs more difficult. If you’re curious how paying points would affect your payment there is a table on page three of your Good Faith Estimate.
Finally, make sure you’re giving the loan officer your Social Security Number when requesting quotes for refinance mortgage rates. Some people think they’re protecting their credit score by refusing to give their SSN when shopping for a home loan; however, when you do this you’re relying on the loan officer’s guess for what you qualify.
The trick to protecting your credit score when shopping for refinance mortgage rates is to limit all of your quotes to a two week period. When you do this your credit score will only get dinged for one lender’s inquiry.
The government recently simplified the Good Faith Estimate, finally making it a useful tool for comparing refinance mortgage rates and fees.
Page two of the new Good Faith Estimate list all of the lender fees starting with the loan origination fee. Paying less for the origination fee is the easiest way to get the most bang from refinancing. The faster you recoup out-of-pocket fees the more benefit you’ll get from the lowest refinance mortgage rates.
How much should you pay for loan origination? Many loan officers will tell you that one percent is standard; however, I’ve reviewed small credit unions that charge as little as $400 for their mortgage origination fee.
Use page two of your Good Faith Estimate to compare refinance mortgage rates and fees from a variety of credit unions, banks, and direct lenders. Just make sure you’re comparing fees from identical mortgage programs. Comparing fees from 30-year fixed refinance mortgage rates to a 15-year ARM doesn’t do much good.
Remember to limit your refinance mortgage rate shopping to a two week period to protect your credit score from lender inquires and focus on getting that loan origination fee as low as possible.
Also, be careful agreeing to pay mortgage rate lock fees. It doesn’t cost the lender anything to lock your refinance mortgage rates and if you walk away form the deal before closing you could be out any application or rate lock fees that you’ve agreed to pay.
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