Get The Lowest Refinance Rates By Improving Your Credit Score

Are you frustrated shopping for a new home loan because the refinance rates you’re being quoted are higher than what lenders are advertising? If so, the likely culprit is your credit score. Did you know that advertised refinance rates are usually based on having a credit score of 720 or higher? Here are several tips before you refi to improve your credit score and make sure you’re getting the lowest refinance rates.

Refinancing rates crept up slightly with the New Year; however, according to the Mortgage Bankers Association demand will remain strong throughout the year. This means there will be a lot of opportunities for you to take advantage of low refinance rates, even if you have credit challenges.

How To Get The Lowest Refinance Rates Possible

If you want the best possible deal on the lowest refinance rates the first step is to get your finances in order starting with your credit reports.

Your credit report is a record of your past finances including car loans, credit card payment history including any collection activity or liens. Credit reports typically go back for seven years. Your credit score is derived from the contents of your three credit reports.

The better (higher) your credit score, the closer your refinance rates will be to what you see lenders advertising. That’s why it’s worth investing a little bit of your team cleaning up the contents of those credit reports.

Just why is that mortgage rate so low?

In this article I’m talking about getting the lowest rates you see lenders advertising. There is a catch when shopping from today’s best mortgage lenders. There’s always a catch right?

When you’re shopping for refinance rates you’ll find that the lowest mortgage rates include discount points. That means you’re paying a fee to get your interest rate that low. One discount point is typically one percent of your mortgage amount and lowers the interest rate by .25%.

If the mortgage rate you’re being quoted requires 1.5 points on a $200,000 home loan you will be required to pay $3,000 at closing just to get the refinance rates you’ve been quoted. Should you pay discount points to lower your interest rate?

Most homeowners want to avoid paying discount points when refinancing. Mortgage rates are still near historically low levels and the amount of time it takes to recoup the fee you’re paying generally makes paying points a bad idea.

When shopping for the lowest refinance rates ask your loan officer for zero point quotes. If you’d like to see how paying this fee affects your payments there is a table on page three of your Good Faith Estimate.

If you haven’t already done so you should head over to the government mandated website AnnualCreditReport.com. The Fair Credit Reporting Act requires the three credit bureaus (Equifax, TransUnion and Experian) to provide you a free copy of your credit report every year. This credit report does not include a credit score; however, if you’re a member of a credit union most offer low-cost monitoring services that include access to your credit score.

When you apply for mortgage refinancing the lender runs your credit and reviews your middle credit score. Suppose your three credit scores are 640, 660, and 720. The lender will base your refinance rates on the 660 credit score. Mortgage lenders use the “middle” score and do not average the three.

How To Improve Your Credit Scores

The most important thing you can do to improve your credit score is to pay all of your bills on time. In the short term you can boost your credit score by paying down the balances on your credit cards below 30% of your credit limit.

While you’re reviewing your credit reports if you find mistakes or inaccurate information each credit agency accepts online disputes you can use to have the information removed. Removing inaccurate negative information from your credit reports can significantly improve your score.

Shop Smartly For Refinance Rates

Many homeowners refuse to provide lenders with their Social Security number when shopping for the lowest refinance rates for fear of damaging their credit score when that lender runs their credit.

It is true that having a mortgage lender run your credit will lower your credit score; however, this is the only way to get an accurate quote based on your finances. If you don’t provide your Social Security number when requesting refinance quotes you’re going to wind up with someone’s guess of what your interest rate should be.

If your credit isn’t where you’d like it to be you risk losing your quoted rates when the lender does run your credit score.

The best strategy for minimizing the impact to your credit score is to limit all of your refinance rate quotes to a two week period. If you do this you’ll only get dinged for one credit inquiry. Always provide your Social Security number when securing mortgage quotes to make sure the quotes you’re getting are accurate.

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You can learn more about getting the best deal on your next home loan by avoiding junk fees and unnecessary points by checking out my free Underground Mortgage Videos.

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10 Steps to Lower Refinance Rates

Getting the lowest refinance rates for your next home loan is important. Overpaying at closing can quickly turn even the best refinance rates into an expensive mistake. Mortgage rate shopping isn’t an apples-to-apples comparison, especially when you’re considering closing costs like the origination fee. Here are ten tips to make sure you’re getting today’s lowest refinance rates without paying unnecessary discount points or junk fees.

1. Beware Unnecessary Discount Points

Lenders usually advertise refinance rates that include discount points. That means if you want the interest rate being advertised you’ll have to come up with the cash at closing. One discount point is one percent of your loan amount which typically lowers your refinance rates by .25 percent.

It doesn’t matter if you’re seeing refinance rates quoted online, on the television or the radio, take a look at the fine print and nine times out of ten the offer requires discount points. Suppose you find refinance rates quoted at 3.25% with one discount point. On a $300,000 mortgage you’d be required to pay $3,000 at closing to qualify for the offer being advertised. Discount points are paid on top of any other lender fees and closing costs you’re required to pay for mortgage refinancing.

Should you pay mortgage discount points? Refinance rates are at their lowest levels in history. One common mortgage mistake made by many homeowners is trying to get the lowest possible interest rate at the expense of fees. Remember when refinancing you won’t benefit from today’s lowest refinance rates until you break even recouping your out-of-pocket expenses. Paying unnecessary discount points means it’s going to take that much longer to break even before you’ll benefit from your new home loan.

2. Lowest Refinance Rates Could Be The Worst Deal

As I mentioned, the loan with the lowest refinance rates could have the highest closing costs even if the Annual Percentage Rate (APR) is lower. The most expensive home loan often has the lowest APR because of the way lenders factor discount points as prepaid interest into their calculations. This is one of the many reasons Annual Percentage Rate is a flawed calculation and should never be used for mortgage rate shopping.

3. Compare Closing Costs On Every Mortgage Offer

When shopping for the lowest refinance rates make sure you’re comparing loan offers using the lender’s par rate. Par mortgage rates do not include discount points or markup for Yield Spread Premium (YSP). YSP is cash paid by the lender when you accept higher than necessary refinance rates. If you eliminate discount points and Yield Spread Premium from your quotes you can focus on comparing the loan origination fee for each offer. Loan origination and discount points are the most commonly overpaid mortgage fees. If you’re short on cash for closing Yield Spread Premium could cover your closing costs and origination fee at the expense of a higher refinance rates.

4. Consider Shorter Loan Term Lengths

When shopping for a new home loan consider 15 year refinance rates. 15 year mortgage rates recently dipped below three percent which could save you a significant amount of cash over the duration of your home loan, especially if you’re still paying six percent or more.

While it’s true that your payment on a 15 year mortgage will be higher than if you had a 30 year term length the amount you’re saving by eliminating that extra 15 years can be staggering.

5. Beware Bad Financial Advice

If your bank or broker is pushing a loan program on you that could overextend your budget don’t be afraid tell them no. Pushy brokers often recommend programs that don’t have your best interests at heart so it’s best to do your homework comparing refinance rates AND fees before accepting a loan officers recommendation.

Many loan officers pitch riskier adjustable rate mortgage rates when you’re shopping for fixed refinance rates because the lower payment seems more attractive. Always check the fine print for discount points and pay close attention to your broker’s loan origination fee.

6. Don’t Overlook Community Based Credit Unions

Just because Wells Fargo is the largest nationwide lender doesn’t mean they’re the best. I’ve reviewed dozens of mortgage lenders on this site and the best deals I’ve found when it comes to fees were from small community based credit unions. If you don’t have the time to shop for the lowest refinance mortgage rates an honest broker can find you a good deal while helping you avoid unnecessary fees and points.

Don’t stop with just one or two mortgage refinancing quotes. You could be missing out on thousands of dollars in savings if you go about refinance rate shopping the wrong way. If your neighbors put as much effort into mortgage rate shopping as they did shopping for a new plasma television they wouldn’t be overpaying thousands of dollars on their current home loan.

7. Research The Best Mortgage Lenders

When shopping for the lowest refinance rates take a close look at the top mortgage companies. Look for lender reviews like the ones I’ve published here and find out who services the loan. Many lenders sell your home loan as soon as you’ve closed on it meaning you’re dealing with a servicing company for your payments and when problems arises.

This is another selling point for small community based credit unions. Most credit unions service their own home loans and you’ll always have a real person to deal with in person if you hit a snag.

8. Check Your Credit Reports First

The mortgage refinance rates you’re quoted depend primarily on your credit score and loan-to-value ratio. If your quotes are coming in higher than what lenders are advertising the likely culprit is your credit score. Check your credit reports for errors at AnnualCreditReport.com and avoid opening new credit accounts until after closing on your new home loan.

If you find mistakes in your credit reports be sure to dispute the errors as any negative information found in your credit reports drags down your credit score.

9. Should You Float or Lock Refinance Rates?

Knowing when to lock or float your refinance rates could mean the difference between getting the lowest refinance rates and just missing the best deal. Once you lock a great refinance rate it’s yours forever. (Almost) The duration of your rate lock needs to allow you enough time to close and get your mortgage funded. Lock for too long and you’ll get higher refinance rates. Lock too short and you could find your lock expires if you hit a snag during underwriting.

If refinance rates continue to fall as they have been consider floating your rate. Also, watch out for rate lock fees. This is a common junk fee that raises your closing costs unnecessarily. Some lenders require a rate lock deposit which is applied to your closing costs. This is still cash out of your pocket that you could be using for other things.

10. Don’t Rush To Get Mortgage Refinancing Done

Mortgage Refinancing isn’t something you should take lightly. According to the HUD Secretary most homeowners are overpaying because they neglected to do their homework. If you find a pushy broker or loan officer don’t feel obligated to continue working with them.

Take your time and pay close attention to the mortgage origination fee as this is one of the most commonly overpaid closing costs. The time you spend comparing loan offers AND fees will be well worth your while and can save you thousands of dollars.

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You can learn more about getting the lowest refinance rates without unnecessary discount points or junk fees by checking out my free Underground Mortgage Videos.

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How to Refinance With Today’s Lowest 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.

credit mortgage rate How to Refinance With Todays Lowest 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…

How to Refinance a Mortgage

Would you like to know how to refinance a mortgage without paying hidden markup or junk fees? Did you know that 97% of your friends and neighbors are overpaying for their home loans because of hidden markup and lender junk fees? Once you know how to refinance a mortgage taking advantage of the wholesale nature of interest rates, you can avoid unnecessary markup and fees. Here are my best tips on how to refinance a mortgage without paying one cent more than is necessary.

How to Refinance a Mortgage Online

The Internet is a great tool for researching home loan offers and learning how to refinance a mortgage loan; however, the problem with all the quotes you receive online is that they include retail markup intended to create an extra commission for someone. The mortgage fat cats know this extra commission I’m referring to as Yield Spread Premium. Don’t worry if you’ve never heard of this fee, most people haven’t AND according to the HUD Secretary in the United States it’s responsible for homeowners overpaying sixteen billion dollars this year alone.

Learn how to refinance a mortgage with wholesale interest rates and you’ll save as much as $1200 a year for the entire duration of your home loan! Doing this is easier than you think; you don’t have to be a personal finance guru or have a relative in the biz to pull this off, you just have to find the right person to refinance your home loan without all the nonsense brokers pull to pad their commissions at your cost.

Mortgage Refinancing with Wholesale Rates

How to refinance a mortgage without overpaying? The first thing you’ll want to do is avoid paying for Yield Spread Premium. What is this fee lender’s pay for marking up your home loan? Simply put, Mortgage Yield Spread Premium is a fee even the best refinance company pays for locking and closing your home loan with a higher than necessary interest rate. I say this fee is unnecessary because you’re already paying the person arranging your home loan a perfectly reasonable loan origination fee for the work they do on your home loan. Did you know that Yield Spread Premium effectively doubles, even triples the commission they get for a few hours work they put into your mortgage refinancing?

How to Get Wholesale Interest Rates

Want to know how to refinance a mortgage with a wholesale rate? You’ve come to the right place… I already mentioned that instead of comparing loan offers into the wee hours of the morning (which is what your neighbors did and look where that got them) if you want to get wholesale rates you’ll need to find the right person to arrange your next home loan. Who is this person? For reasons that I’ll discuss in a later refinancing article I can tell you that this person does not work for your bank. The ideal person for arranging your mortgage refinancing is a self-employed mortgage broker working in your area. These brokers don’t have the overhead that even the best mortgage refinance companies have and are much more likely to negotiate the kind of deal I’m describing here.

Now that your learning how to refinance a mortgage without hidden markup you can get stated by telling prospective brokers that you understand how Mortgage Yield Spread Premium works and will not accept any home loan that includes the markup. Offer to pay a reasonable free for loan origination (one percent is perfectly reasonable) and you’ll be will on your way to securing a wholesale interest rate.

You can learn how to refinance a mortgage without overpaying one cent in detail by checking out my Underground Mortgage Refinancing Videos.

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Here’s a quick sample to help you find the right person to arrange your next home loan.

The Secret to Getting the Lowest Mortgage Rates

Getting the lowest mortgage rates can be tricky, especially if you choose the wrong person to arrange your next home loan. Pick the wrong person and you’ll not only get too high a mortgage rate but you’ll pay mortgage junk fees in the process. Here are several tips to help you find the right person to arrange your next home loan while avoiding unnecessary markup and mortgage junk fees.

Mortgage Rate Secrets

When it comes to mortgage loans what you don’t know will hurt you. Did you know the average homeowner in the United States overpays $100 or more per month for their home loan? This because the person arranging the loan pulled a fast one with the mortgage rate… In fact, the Secretary of Housing and Urban Development stated this mortgage trick will cost homeowners in the United Sates sixteen billion dollars this year alone. Don’t want to be a victim of this statistic you say? You don’t have to be…and I’ve got the tools for you to ensure that you’re not.

Where to Get a Mortgage Loan

Before we get into where to find the perfect mortgage loan I should talk about where not to get a home loan.

1. Stay away from your bank. Banks are exempt from the Real Estate Settlement Procedures Act and are not required to disclose any of their markup or profit margins to you. If you take out a home loan from your bank you’ll never know how much you’ve overpaid because the bank is simply not required to tell you. Ignorance is bliss right? Only if you like throwing your money away…
2. Stay away from faceless Internet Mortgage lenders. We’ve all seen the commercials on TV; however, spend a few minutes reading the fine print from the Lending Trees of the world and you’ll quickly discover just how bad their junk fees are.
3. Avoid mortgage brokers that charge Yield Spread Premium and other junk fees. I’ll get into Yield Spread Premium in a moment as this is the hidden junk that causes most people to overpay.

So where is the best place to get a mortgage loan? The best home loan around isn’t going to be from a place, it’s from a person. That’s right, getting the best deal for your mortgage isn’t about shopping around for the best loan offer… it’s all about shopping for the right person to arrange your home loan.

Who Is the Right Person to Arrange Your Mortgage?

The right person isn’t a mortgage banker or the hotshot broker in the yellow pages with a company hummer. These people will be unwilling or unable to negotiate the type of mortgage deal that will get you the lowest possible mortgage rate. What you’ll need to find is a small-time, self-employed mortgage broker willing to work for a flat fee without marking up your mortgage rate for an “extra” commission. What is this extra commission that drives up most people’s mortgage payments unnecessarily wasting thousands of dollars? In the mortgage business the fee created when your mortgage rate is called “Yield Spread Premium.”

Yield Spread Premium Definition

Yield Spread Premium is an amount of money created when the person arranging your loan gets you to pay an unnecessarily high mortgage rate. The lender and your mortgage broker both know the interest rate you qualify; however, the broker overcharges you to collect this fee. Many mortgage brokers today are motivated solely by greed and line their pockets at their customer’s expense. The good news is that you can avoid this unnecessary markup of your interest rate and mortgage broker tricks saving thousands of dollars. It doesn’t matter if you’re refinancing your existing mortgage or taking out a purchase loan…these mortgage tactics work for both.

How does this mortgage rate markup work? Mortgage lenders reward brokers for loans that close with higher than necessary mortgage rates with a commission of 1% for every .25% they overcharge you. This is on top of the origination fee that they’re already charging you, double dipping their fee if you will. What you’ll need to avoid this is find the right mortgage broker instead of shopping for a loan offer. When you’re shopping for a mortgage broker tell them that you understand how Yield Spread Premium works and will not accept any mortgage that includes this markup. Offer to pay this person a flat, one percent mortgage origination fee for a home loan without Yield Spread Premium attached. There are honest mortgage brokers willing to work for one percent, you just have to find one.

What About Mortgage Junk Fees?

Just because you find a mortgage broker willing to work for a one percent origination fee doesn’t mean you shouldn’t be concerned about junk fees. There are a number of junk fees that mortgage brokers slip into their loans just to boost their fees. You should carefully review your HUD-1 statement for junk fees prior to closing. Don’t rely on the Good Faith Estimate you receive as this document is little more than marketing propaganda used to lure homeowners into overpriced mortgage loans. When it comes to fees your HUD-1 Settlement Statement is the final word.

If you find anything on your HUD-1 that resembles a mortgage broker courier fee or rate lock fee you should question consider taking your home loan somewhere else. These fees, especially rate lock fees are pure junk used by dishonest mortgage brokers to boost their profit at your expense. If you are working with a broker that charges a rate lock fee you can be certain you’re dealing with a dishonest mortgage broker that cannot be trusted…period.

You can learn more about avoiding junk fees and getting the lowest possible mortgage rate for your next home loan by registering for my free Underground Mortgage Videos. Here’s a sample of what you’ll learn when you sign up:

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Register today, these mortgage refinancing videos are yours free with no obligation.