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.

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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
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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…

Are 15 Year Mortgage Rates Always The Best Option?

If you’re in the market for mortgage refinancing you might have noticed lenders and programs pushing 15 year mortgage rates. There’s been a strong push for homeowners in the United States to pay off their home loans faster. Even the government is recommending shorter mortgage term lengths to get out of debt faster. Is it really in your best interest to refinance with 15 year mortgage rates? Here are the pros and cons of shortening your term length to help you make an informed decision for your next home loan.

15 Year Mortgage Rates For Underwater Homeowners

Another push for 15 year mortgage rates is for underwater homeowners with the government refinance program HARP 2.0. The reason for this is that shorter term-lengths like those offered with 15 year mortgage rates pay down your balance at a faster rate, thus building equity quickly and getting you right-side up.

15 year mortgage rates are a bit lower than 30 year fixed rates right now meaning the payment for most people will only be a few hundred dollars more. At first glance this sounds like a good idea; however, as the saying goes what’s good for Peter isn’t always good for Paul. If you’re paying $1350 on a 30-year fixed rate mortgage why not switch to a 15 year term length if the payment won’t go up by much? Historically low refinance rates make this possible and can save you a boatload of cash from mortgage interest.

If you’re currently paying mortgage insurance choosing 15 year mortgage rates will get you to the point where you can cancel your mortgage insurance more quickly with the side benefit of building ownership in your home.

Is There a Downside to 15 Year Mortgage Rates?

Because interest rates are so low right now you could make the argument that it’s not a bad time to carry debt, thus freeing up your cash for other things. It doesn’t take much to invest for a higher rate of return than what you’re paying in mortgage interest. The uncertainty hanging over our economy is still there; we’re not out of the woods with the housing market either. Even if you’ve got a respectful loan-to-value ratio now, who’s to say in a year or two that you won’t be underwater thanks to declining home values and a faltering economy?

If you qualify for mortgage refinancing you might consider refinancing for a lower payment to give yourself a little breathing room in your budget. (Especially if you’re paying on an Adjustable Rate Mortgage) Don’t get me wrong, equity is great but there’s no guarantee you’ll ever get it back when you sell your home. Paying that extra cash to pay down your mortgage could be wasted if you have to sell in a down market like the one we have now.

The point I’m making is not that 15-year mortgage rates are bad; simply that there’s more to consider with the big picture when refinancing your home. The fees that you pay for instance will make or break the deal that you’re getting. If you’re not able to break even recouping your out-of-pocket expenses from closing costs you’re going to be losing money no matter how low your refinance rates. One of the most common mortgage mistakes when refinancing is overpaying the loan origination fee or falling for unnecessary discount points. Remember, the less you pay at closing the more benefit you’ll get from today’s low refinance rates.

Click Here For More Details…

You can learn more about paying less for your next home loan 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 while avoiding unnecessary fees…

Locking vs. Floating Your Mortgage Refinance Rates

Want the lowest mortgage refinance rates for your next home loan and aren’t sure if you should lock or float? Locking or floating your refinance rates at the wrong time could cost you if you find yourself on the wrong side of the market. Here are several tips to help you decide if you should lock or float mortgage rates to get the best deal on your next home loan.

The First Rule of Locking Mortgage Rates

Don’t panic. Mortgage refinance rates are at the lowest levels seen in sixty years and it’s unlikely they’ll go up anytime soon. The refinance rate you lock (or float) will determine how much your payments will be and in part how good of a deal you’re getting. Fees are a more important indicator of how good a deal you’re getting when mortgage refinancing but I’ll get to that in a moment.

While it’s not the most important discussion you need to have with your lender, when and whether to lock your refinance rates is an important one. Some lenders assume automatically that you’ll want to lock because they don’t want to explain to you why refinance rates went up. For many homeowners locking is a no-brainer, if you’re offered refinance rates of 4.5% and you’re happy with that they’ll lock it for you.

Once you’ve locked a fixed rate mortgage you’ll know what your payment will be for the duration of your home loan.

Wait, don’t mortgage rates change every day? It’s true refinance rates fluctuate on a daily, even hourly basis. So if I float my refinance rate and interest rates go down my payment will be less right? That’s correct; however, if rates go up and you’re floating your payment will go up also.

Either way, locking or floating your mortgage rates is a risk. Is it possible to time the market and get the lowest possible refinance rates? Some brokers will tell you that it is possible, usually when they’re trying to close the deal on you becoming their customer. Truth be told, there are just too many variables to accurately predict which way mortgage rates are going; however, you can make broad assumptions if you’re so inclined.

There is a broad rule of thumb when it comes to mortgage rates: bad economic news generally means lower rates. That’s why refinance rates are so low right now.

There Are More Important Things to Worry About

If you’d rather sleep at night and find a mortgage quote you like, lock the rate and don’t worry about floating. This is why refinance rate shopping is so important. Where should you be focusing your energy instead of trying to time the market?

Sure the refinance rates you lock are important; however, the most important aspect is the fees you pay to get that interest rate. Overpaying at closing because you didn’t pay attention to the loan origination fee or agreed to pay unnecessary discount points make it difficult, even impossible to break even recouping your out-of-pocket expenses. If you never break even on closing costs you’re losing money no matter how well you timed floating your interest rate.

That’s why shopping for refinance rates AND fees that don’t include comparing discount points is more important. What’s the best way to shop from today’s best mortgage lenders? I always recommend starting with community based credit unions as they tend to offer better deals than giant lenders like Bank of America or Wells Fargo. If you’re short on cash you can accept a higher mortgage rate to get your closing costs paid with Yield Spread Premium.

However you pay your mortgage fees it’s important to make sure you’re not overpaying if you want the best deal on your next home loan.

Click Here For More Details…

You can learn more about paying less for mortgage refinancing by avoiding points and junk fees 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…

How to Refinance a Vacation Home

Refinancing a vacation home with today’s low refinance rates can be tricky but it’s not impossible. With traditional, 30-year fixed refinance mortgage rates hovering below 4 percent the payoff can be worthwhile especially if you’re paying six percent or more on your vacation home’s mortgage. Here are several tips to help you qualify for mortgage refinancing on your vacation home without paying unnecessary points or junk fees.

Vacation Home Mortgage Refinancing Made Easy

Many homeowners with vacation mortgages haven’t considered refinancing with today’s low refinance rates because they don’t think they’ll qualify. As a result many are paying more than six percent on a vacation home mortgage, an avoidable expense in today’s market.

The process of refinancing a vacation home is a bit more complicated thanks to the mortgage crisis, but not impossible. To qualify for mortgage refinancing on your vacation home you can expect lenders to ask for significant documentation of income including several years tax returns and bank statements. The inconvenience of providing extensive documentation of your income and assets can be well worth your time as lowering your interest rate by even one percent or more translates to thousands of dollars in savings.

You Need a Favorable Loan-to-Value Ratio

If you’re underwater in your vacation home it’s going to be very difficult if not impossible to refinance your vacation home mortgage. Most lenders are looking for 80 percent loan-to-value, even 70 percent or better in some cases. In some parts of the country like Las Vegas many homeowners are finding they owe double what their homes are worth. Depending where your vacation home is located you can expect lenders to require a recent appraisal of your home’s value as part of the application process.

Mortgage lenders use different standards for approving refinancing for an owner-occupied, primary residence than they do for vacation homes and investment properties. Unfortunately the FHA doesn’t offer mortgage loans for vacation properties and government refinance programs like HARP only apply to your primary residence.

Don’t be surprised if the lender requires Private Mortgage Insurance (PMI) to get your vacation home refinance mortgage application approved. Paying for PMI can add one percent or more to your mortgage payment, an often unavoidable expense in this situation.

Clean Up Your Credit Reports First

Your credit score has a lot to do with getting your vacation home refinanced. This number is the biggest factor in getting your application approved and determining what refinance rates you’ll get. If your FICO score is less than 780 you’ll need to spend some time cleaning up your credit reports. Late payments, collection accounts and judgments all drag down your credit score.

You can make sure mistakes in your credit reports aren’t dragging down your score by visiting the website AnnualCreditReport.com. The three credit agencies of Equifax, TransUnion, and Experian are required by law to provide you with a free copy of your credit report once per year. They will try and sell you a credit score and monitoring service; however, you’re not required to sign up just to view your credit reports.

Beware Common Mortgage Refinancing Mistakes

When it comes to refinancing a vacation one common mistake is to portray the home as an investment property. Investment mortgage loans are generally much more expensive than vacation homes. Lender fees and refinance rates will be lower if you’re upfront with the lender about the use of your second home.

If you have good credit and a favorable loan-to-value ratio mortgage refinancing a vacation home is not difficult, just watch out for unnecessary discount points and fees. Overpaying the loan origination fee for instance or falling for discount points can make it difficult, even impossible to break even recouping your out-of-pocket expenses from refinancing your vacation home.

Click Here For More Details…

You can learn more about getting the best deal on your vacation home mortgage without paying unnecessary lender fees or points 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 saving thousands of dollars on your next home loan for less than an hour of your time…