5 Tips to Quickly Boost Your Credit Score Before Refinancing

If you want today’s lowest refinance rates from the best mortgage lenders you need to have a minimum credit score of 740. If you’re frustrated that the refinance rate quotes you’re getting are coming in higher than what lenders are advertising the likely culprit is your credit score.

Here are 5 tips for improving your credit score before applying for your next home loan.

How to Quickly Boost Your Credit Score

  1. Pay Down The Balances on Your Credit Cards
  2. The balances on your credit cards account for 30 percent of your credit score. Paying down your credit cards is the fastest and easiest way to boost your credit score. Try to pay down your balance down to less than 30% of your limit on each card.

  3. Check Your Credit Reports For Errors
  4. You can get a copy of all three of your credit reports by visiting the website AnnualCreditReport.com. Removing mistakes from your credit reports can boost your score by as much as 100 points once the error is fixed. Common overlooked mistakes include medical billing collections.

  5. Dispute Mistakes With Each Credit Bureau
  6. If you find mistakes in your credit reports you’ll need to dispute the error with each credit agency reporting the mistake. There are three credit bureaus that maintain your credit reports including Equifax, Experian and Transunion. If you’re disputing items on your credit report you’ll also want to contact the creditor to get the disputed item resolved and removed as quickly as possible.

  7. Avoid Applying For New Credit
  8. Old unused accounts only help improve your credit in you use them occasionally. Creditors are looking for responsible use of credit. Applying for new accounts or making major purchases like a new car could be seen as overextending yourself.

    If you have a choice between opening a new account or using an old credit card to make a purchase before paying down the balance it’s best to opt for paying with the old credit card.

    The general rule of thumb is to avoid applying for new credit before taking out or refinancing your mortgage.

  9. Avoid Closing Credit Card Accounts
  10. Closing credit accounts like those department store charge cards is more likely to lower your credit score. Having credit available isn’t a bad thing, unlike carrying large balances or maxing out your credit cards. You’ll get the most bang for your buck by paying the balances down below 30% of your credit limit.

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

httpv://www.youtube.com/watch?v=be9md0A0_2c
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Here’s a quick sample to get you started with today’s best mortgage companies without paying too much…

How to Score The Lowest Refinance Rates

Spend any amount of time shopping for the lowest refinance rates and you might be frustrated to discover the quotes you’re getting are higher than what lenders are advertising. This is because advertised mortgage rates tend to be based on having a specific credit score and financials. Here are several tips to make sure you’re getting the lowest refinance rates possible for your next home loan.

Shopping for the Lowest Refinance Rates

Getting refinanced with the best mortgage lenders is difficult these days. Government regulation and tighter underwriting standards from banks and lenders make just getting approved difficult for many homeowners. With refinance rates near the lowest levels in sixty years you would think everyone would have refinanced already but many homeowners simply can’t qualify.

If mortgage approval isn’t an issue there’s no shortcut to getting the lowest refinance rates. The underwriting process hasn’t changed since the mortgage meltdown; lenders have just raised the bar on their requirements.

If you want the lowest possible refinance rates without paying discount points you simply need to cover your bases with documenting income, equity and credit.

Your Income, Your Home Equity, Your Credit

To qualify for lowest refinance rates regardless of the type or mortgage or program you need to document sufficient income, equity and credit. It doesn’t matter if you’re refinancing a conforming mortgage, considering an FHA streamline refinance, a VA Interest Rate Reduction Refinance Loan (IRRRL) or have a jumbo mortgage; you won’t get the lowest refinance rates until your financial ducks are in a row.

Your Personal Finance Ducks:

  • Debt Income Ratio: Your monthly income versus monthly debt obligation
  • Home Equity: Your loan-to-value ratio representing your share of ownership
  • Your Credit: Your middle credit score from Equifax, Experian & TransUnion

To get approved for mortgage refinancing you must meet a particular lender’s minimum qualification for all three. When mortgage approval isn’t the issue and you want the lowest refinance rates all three of your ducks need to be in a row to score that lender’s advertised mortgage rates.

Get Your Financial Ducks In Row

Ideally before applying for mortgage refinancing you’ll have a large income, favorable home equity and really good credit. Realistically, not everyone will have all three. If your three ducks are less than stellar that’s okay…there are steps you can take to improve your finances before refinancing.

Ever hear of compensating factors? Compensating factors are other things in your personal finances that make up for some of the blemishes on your application. Think of it as a stronger duck holding up a weaker one. Suppose your income isn’t that great but you have outstanding equity and credit; it’s likely that you’ll be approved for refinance rates close to what lenders are advertising.

This isn’t to say if you have less than stellar credit there aren’t things you can do before applying to improve your score. One of the most effective strategies for quickly improving your credit score is to pay down the balances on your credit cards. It goes without saying but you should also avoid making late payments at all costs.

What About Home Equtiy? What if You’re Underwater?

If you’re underwater in your current mortgage your chances of getting refinance rates close to what lenders are advertising are slim to none. What you should be focusing on if you’re HARP 2.0 eligible is shopping for the lowest program refinance rates and fees. You still need your ducks in a row and compensating factors can improve your interest rate.

If you’re not HARP 2.0 eligible because Fannie Mae or Freddie Mac don’t back your mortgage there isn’t much you can do at the moment. HARP 3.0 is rumored to remove the Fannie/Freddie requirement bringing underwater mortgage refinancing to just about everyone.

Where You Should Be Focused When Refinancing

Getting the lowest refinance rates is important but there’s more to consider if you want the best deal for your next home loan. In fact, the fees you pay when closing on your new mortgage make or break the deal you’re getting, not just the interest rate. Pay too much closing on your new home loan and it’s going to be difficult, even impossible to recoup your out-of-pocket expenses. Considering that the average homeowner refinances every four or five years recouping your closing costs is the most important factor to consider.

Some of the most commonly overpaid mortgage fees include the loan origination fee or paying discount points. Not only are these the most commonly overpaid refinancing fees but they are the easiest to negotiate. Getting a better deal on your next home loan than your neighbors got is easier than you think.

Click Here For More Details…

You can learn more about getting the best deal on your next home loan without overpaying lender fees at closing by checking out my free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
  • Underground Mortgage Videos
Here’s a quick sample to get you started refinancing with today’s best mortgage companies without overpaying at closing…

When Is The Best Time to Refinance Your Mortgage?

If you’re searching for the lowest refinance rates you might wonder when it’s the best time to refinance your mortgage. Taking the time to learn how to refinance the right way will help you avoid many of the common mortgage mistakes your neighbors are paying for. Here are several tips to help you starting with the best time to refinance your mortgage loan.

The Best Time to Refinance Your Mortgage

The rule of thumb on when the best time to refinance your mortgage is during bad economic times. During the recession mortgage refinance rates have been at their lowest levels in history and lenders are desperate to close home loans. Savvy homeowners can use this to refinance not only with the lowest refinance rates but with outstanding terms and rock-bottom prices.

The test of how good a deal you’re getting on your mortgage refi comes not from getting the lowest interest rate but how much it’s costing you to close. Commonly overpaid refinancing closing costs include the loan origination fee and paying unnecessary discount points.

When is the Worst Time to Refinance?

The worst possible time to refinance your home is during economic upturns. Home values tend to go up and many homeowners see increases in their disposable income. Banks and other financial institutions expand and open new branches. When the market is inflated refinance rates and lender fees tend to be significantly higher than you see during a recession.

Unless you’ve been living under a rock you know that we’ve been through the worst economic recession since the depression meaning now is the best time to refinance your mortgage. Refinance rates are near the lowest levels they’ve been in sixty years so there is no better time to lock in a lower payment.

What is the Best Mortgage Type?

The best type of mortgage loan depends on your situation. Mortgage type means a couple of different things including the term length (15-year vs 30-year) and the type of interest rate (fixed rate versus adjustable rate). If your budget needs the lowest payment choosing longer term lengths with adjustable interest rates will get the job done.

If you’re not familiar with Adjustable Rate Mortgage loans (ARM) you’ll see them quoted commonly as 5/1 or 7/1 ARMs. The first number represents the fixed period and the second is the frequency the lender will reset after the fixed period expires. In the case of a 5/1 ARM the mortgage is fixed for the first 5 years and resets every 1 year after.

If your goal is to pay down your home loan as quickly as possible choosing a shorter term-length and a fixed rate mortgage is a good option. Popular choices for mortgage refinancing include 15 and 10-year term lengths.

Common Mortgage Mistakes When Refinancing

One of the most common mistakes people make is focusing on getting the lowest refinance rates at the expense of fees. The more you pay at closing the less benefit you’ll get from the lowest refinance rates. It’s not just a one-time closing cost you pay for your mortgage but an out-of-pocket expense you need to break even recouping before you benefit from lower payments.

The more you pay for things like the loan origination fee or discount points to buy down your interest rate the longer it’s going to break even, if you break even at all.

Click Here For More Details…

You can learn more about getting the best deal from today’s best mortgage lenders by checking out my Free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
  • Underground Mortgage Videos
Here’s a quick sample to get you started refinancing without overpaying at closing…

A Practical Guide To Negotiating For The Lowest Refinance Rates & Fees

Everyone knows that shopping for the lowest refinance rates will get you a better deal. What most people don’t know is that you can negotiate the terms of your new home loan when refinancing. In fact, negotiating fees and terms while shopping for the lowest refinance rates will get you the best deal if you go about it properly.

Here are several tips for getting the lowest refinance rates without paying unnecessary fees at closing.

Refinance Rates Can Be Deceiving

There are fees you can negotiate when refinancing that directly impact your bottom line (think payment amount). The two most commonly overpaid refinancing costs include the loan origination fee and discount points. Mortgage brokers and loan officers generally work for a commission. They receive part or all of the loan origination fee which could be split with a bank or lender. The more you pay for the loan origination fee the less benefit you’re getting from finding the lowest refinance rates because you’ll spend more time recouping your higher out-of-pocket expenses.

Discount points directly affect the refinance rates you’re getting as a way of buying down your interest rate. Most banks and lenders quote rates that include discount points meaning you have to pay the fee in order to get that particular interest rate. One full discount point is one percent of your loan amount; however, it’s common to find refinance rates quoted with varying fractions of a point.

Refinance rate shopping only makes sense if you’re making an apples-to-apples comparison of offers across lenders and it’s extremely difficult to do this with points in the mix. Should you agree to pay discount points? Refinance rates are still near the lowest levels in history so there is very little gained from paying points for anyone but your lender.

Always start your negotiation for the lowest refinance rates and fees with a zero point quote across several different banks and lenders.

Mortgage Refinance Rates Can Be Negotiated

The interest rate you get can also be negotiated especially when working with a mortgage broker. Your broker works from daily rate sheets from a variety of lenders and has a degree of freedom when quoting refinance rates just like the sticker price on your car. It’s worth mentioning that not all loan officers have the freedom to make concessions on refinance rates. This is why I recommend you start shopping with small community-based credit unions and independent mortgage brokers.

Closing Costs & Third-Party Fees

You will encounter fees refinancing your mortgage that cannot be negotiated. This includes taxes and fees paid to your State for transfer and recording the deed or a survey. Your appraisal fee cannot usually be negotiated because this is done by an independent appraiser that you have no say in selecting. When it comes to services for title searches and your homeowners insurance, inspections and attorney fees you have a voice in selecting who you’re working with, meaning you could shop for services with lower fees. Once you compare third-party fees from several lenders you’ll get a sense for what’s reasonable and which lenders are padding their fees.

How to Haggle With Mortgage Lenders

Shopping for the best deal on the lowest refinance rates is difficult because different lenders have different fee structures. Some lenders even invent names for their fees just to confuse inexperienced homeowners. There are also junk fees that you have no business paying like fees for copies and couriers.

You can find a list of the fees on your Truth-in-Lending disclosure form and on the HUD-1 settlement statement. It’s a good idea to go over each fee line-by-line with your loan officer and question everything.

Want the best deal refinancing your home loan? Question Everything.

Once you’ve done this you can approach your loan officer with rival lenders’ offers as leverage for negotiating. “This is what lender XYZ is offering with these fees. I’ll pay you this amount for this mortgage rate.”

Click Here For More Details…

You can learn more about negotiating for the lowest refinance rates and fees from today’s best mortgage lenders by checking out my free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
  • Underground Mortgage Videos
Here’s a quick sample to get you started finding the lowest refinance rates AND fees from today’s best mortgage companies…

Can a Mortgage Broker Get You The Lowest Refinance Rates?

If you’re scouring the earth for the lowest refinance rates you might wonder if you should be dealing with your bank, an internet giant like Amerisave, or enlisting the services of a mortgage broker. There are many options for your next home loan ranging from local credit unions to independent bankers and they all seem to quote different amounts for lender fees and services. Here are several tips to help you find the right person to arrange your next home loan with the best combination of the lowest refinance rates and fees.

Should You Focus On Getting The Lowest Refinance Rates?

Shopping for the lowest refinance rates is not only a pain in the neck but requires a lot of legwork. Big banks like Bank of America and Wells Fargo used to be a fast and convenient but these days you’re looking at a 90+ day backlog on your refi.

One of the most common mortgage mistakes is focusing only on getting the lowest refinance rates at the expense of fees. The problem with refinance rate shopping is that it’s difficult to make apples-to-apples comparisons of multiple lenders, especially when they’re trying to hard sell you.

Once you get past loan officer pitches the question becomes can the lender get the job done or will it drag out for six months?

This is where recent recommendations from friends and neighbors come in handy about their experiences refinancing with lender XYZ. There are a lot of un-reputable mortgage lenders and brokers out there that not only abuse their customers with fees but do not complete the transaction with any sense of urgency whatsoever. If you choose a lender like this you could miss out on snagging that low refinance rate.

Mortgage rate shopping is a lot of work but the payoff could save you thousands of dollars from unnecessary fees AND get you a lower payment amount.

If you’re short on time and patience when shopping for refinance rates one shortcut is to use a mortgage broker as a middleman between yourself and potential banks and lenders. Instead of interviewing 25 mortgage companies, banks and credit unions the broker can do that legwork for you.

Think of your mortgage broker as your personal home loan shopper, with loads of industry contacts and access to programs and offers the average Joe would never know about. The down side is that mortgage brokers don’t work for free and the ones that tell you that the lender pays their commission need to be treated with a healthy dose of skepticism.

Can Your Mortgage Broker Get You a Better Deal?

If you’ve done any amount of shopping for refinance rates you might find that banks and “direct” mortgage lenders offer lower rates than independent bankers and mortgage brokers. Refinance rates get confusing when banks and lenders quote discount points and varying fees in their offers. If you want the best deal for your next home loan you should investigate all your options before choosing any one lender.

Mortgage brokers are a useful tool for vetting offers that include unnecessary discount points and junk fees for a cost. How much is reasonable to pay for the mortgage broker fee? One percent for the loan origination fee is standard but you may be able to negotiate to pay less. I’ve personally reviewed small community-based credit unions that charge as little as $400 for the loan origination fee so shopping around for a broker is also important.

What about those brokers that claim the lender is paying their commission? What could possibly wrong with having someone else pay the broker’s commission? The problem with these “slick” offers is that while it’s true the lender is paying the broker commission, the reason they’re paying it is because you’re accepting higher not the lowest refinance rates. Yield Spread Premium was never outlawed as some homeowners incorrectly believe and is alive and overcharging your neighbors to this day.

The only thing that changed when it comes to Yield Spread Premium (YSP) is that the broker cannot charge you the origination fee AND accept lender paid compensation. It has to be one or the other.

There’s no easy answer to argument of Banks vs. Mortgage Brokers because your answer will depend on your individual situation, the market and whether or not you’ve found a good, trustworthy mortgage broker.

Click Here For More Details…

You can learn more about getting the lowest refinance rates without paying unnecessary fees or markup by checking out my Free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
  • Underground Mortgage Videos
Here’s a quick sample to get you started with today’s best mortgage lenders without overpaying…