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 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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Here’s a quick sample to help you make the smart choice from today’s best mortgage companies…

Smarter Home Loan Interest Rate Comparison Shopping

Comparing mortgage rates is easier today thanks to the standardized Good Faith Estimate courtesy of the Department of Housing and Urban Development. The new Good Faith Estimate outlines your closing costs simply making it easier to shop from today’s best mortgage lenders. Here’s how to use the new disclosure form to make the best home loan interest rate comparison.

Get a Better Home Loan Interest Rate Comparison

Finding the best mortgage rates with the lowest out-of-pocket fees can be confusing. Do you know the difference between processing fees and document fees? Do you know how Yield Spread Premium (yes it still exists) affects your loan origination fee?

The most common mortgage mistake your neighbors make with their home loan interest rate comparison is looking at rates and fees across different programs. The first thing you should do when shopping for a home loan is understand and choose a program. Once you’ve decide which program is best for you stick with it and don’t let a fast talking loan officer talk you into changing.

Understanding Your Good Faith Estimate

The problem in the past was that lenders cooked up different names for their fees to make home loan interest rate comparison shopping confusing. One would call it a processing fee the other an application fee. The new Good Faith Estimate standardizes lender fees and terms.

Your mortgage loan program and any “gotcha” fees like the prepayment penalty are clearly disclosed.

According to the government the new Good Faith Estimate saves you $700 just by eliminating the shady names lenders used to confuse homeowners.

Here are 4 steps to follow for the best home loan interest rate comparison shopping:

  1. Shop Smartly For Interest Rates & Fees

  2. It’s impossible to make an apples-to-apples comparison of interest rates and fees on your Good Faith Estimate if you’re comparing home loans across different programs. Once you’ve decided that a conventional 30-year fixed rate mortgage is right for you don’t let a shady loan officer confuse you by quoting rates and fees from a 7/1 ARM. If you confuse the issue by comparing across different programs you’ll overpay at closing every time.

  3. Shop With Accurate Mortgage Rate Quotes

  4. Many homeowners refuse to give their social security number when shopping because they’re afraid the quote will damage their credit. While it’s true that your credit score will take a hit by having a mortgage lender run your credit you can manage the impact by limiting inquires to a two week period.

    If you do this you’ll only get dinged once. Also, when requesting mortgage quotes during this two week period always provide your social security number to ensure you’re getting an accurate quote. If you don’t provide your SSN the best you can hope for is that lender’s advertised rate or worse yet someone’s guess.

  5. Use Your GFE’s Shopping Chart

  6. Page three of your Good Faith Estimate has a chart you can fill out to make a home loan interest rate comparison across different lenders. Once you fill out the chart at the bottom of page three you can compare loan characteristics and fees from up to four lenders. Be careful when using the shopping chart as some of the questions might tempt you to compare home loans across different programs which is a mistake.

  7. Avoid Focusing Only On Mortgage Rates

  8. Many homeowners get so caught up on chasing the lowest mortgage rates that they overlook fees. The fees you pay at closing make or break the deal you’re getting. If you focus only on mortgage rates at the expense of discount points and the loan origination fee you’re guaranteed to lose money.

    The fees you need to focus on are found on page two of your Good Faith Estimate. The loan origination fee and any Yield Spread Premium are found in section A box 1 and 2. Did someone mistakenly tell you Yield Spread Premium is illegal now? Look at box 2: “The credit or charge for the interest rate of X% is included in our origination charge. (See item 1 above.)”

    This is Yield Spread Premium and it’s perfectly legal. If you’re getting a credit towards your loan origination fee you might think that it’s less cash coming out of your pocket; however, you’re accepting a higher mortgage rate for the credit which means a higher payment.

    The loan origination fee in box 1 is important and can save you a significant amount at closing. Many brokers will tell you that one percent is standard but I’ve reviewed community credit unions that charge as little as $400 for loan origination. The less you pay the better the deal you’re getting on your next home loan.

Shopping smartly is the best strategy and using the new Good Faith Estimate’s home loan interest rate comparison table to compare fees can save you thousands of dollars at closing.

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.

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Here’s a quick sample to help you find the best mortgage rates with the lowest fees…

Using a Mortgage Rates Calculator to Decide if Refinancing Makes Sense

If you’re considering mortgage refinancing and want to know if a new home loan is the right decision, using a mortgage rates calculator can help. Many financial advisors will tell you not to refinance unless your new mortgage rate is at least two percent lower than your existing rate; however, a simple mortgage rates calculator exposes this for the bad advice that it is. Here are several tips to help you decide if refinancing is right for your financial situation with a simple mortgage rates calculator.

Mortgage Rates Calculator Basics

Working with a mortgage rates calculator is pretty simple. Plug in your loan amount, interest rate, and loan term and it will spit out your new payment amount. How can you use this to decide if a new home loan makes sense? Instead of relying on an old wives’ tale like the two percent rule of mortgage refinancing, it makes more sense to base your decision on the cost and savings of the new home loan. Every home loan has closing costs and fees associated with it that cut into any potential savings you may realize from refinancing. The mortgage rates calculator shows you how long it will take to recoup these expenses with your new, lower payment.

Mortgage Refinancing Scenario #1

Here’s an example to show you how to use a basic mortgage rates calculator. Suppose for the sake of this example you are refinancing your home for $315,000. The broker is charging you an origination fee of 1.5% meaning that you’ll have to pay $4,725 to close with a mortgage rate of 6.0%. In this example plug the loan amount and new mortgage rate into your mortgage rates calculator and choose a fixed rate, thirty-year loan term.

The mortgage rates calculator determines your monthly payment amount of $1,888 and can display an amortization schedule showing how your home loan is paid down. The previous interest rate in this example was 6.75%, which means the old payments were $2043. Mortgage refinancing in this scenario yields a savings of $155 per month. (Subtract the new payment from the old to determine savings $2043-$1888=$155) That’s a savings of $1860 per year!

Before you can realize this savings from the new home loan you need to recoup the $4,725 you paid the broker along with any other closing costs you are required to pay. To determine the amount of time it will take you to recoup your expenses simply divide your total costs for the new home loan by the amount you’re saving each month. In this example the broker fee is costing us $4,725 so if we divide by the savings we determined from our mortgage rates calculator. ($4,725/$155 = 30 months / 12 months in a year = 2.5 years)

If you’re comfortable with the amount of time it will take to recoup your expenses then the new home loan probably makes sense in your situation. As you can see from the previous example we’ve debunked the two percent rule of mortgage refinancing; however, did you know it’s possible to cut hundreds of dollars from your payment by avoiding hidden markup?

You can learn more about cutting hidden markup and junk fees when refinancing your home by checking out my free Underground Mortgage Refinancing Videos.


Here’s a quick sample to get you started by exposing one of your mortgage broker’s dirty secrets.

Mortgage Refi Secrets Revealed

If you’re considering a mortgage refi for your existing home loan there are several things you must know to avoid overpaying. The mortgage refi process is filled with banker fat cats vying to make a buck at your expense. Overpaying usually results in paying a hundred dollars or more per month than you should be; add to this the junk fees that brokers and lenders try to slip in and you could easily be out thousands of dollars every year for no good reason. Here are several of my best mortgage refi secrets that promise to save the average homeowner $1200 per year from unnecessary markup and junk fees.

Mortgage Refi Pitfalls to Avoid

The biggest pitfall that you need to know about is the trap of comparison-shopping. How can comparison-shopping be a bad thing you ask? Simply put most homeowners, including nearly all your neighbors rely on incomplete or just plain false information provided by lenders in the form of the Good Faith Estimate (GFE) and the Annual Percentage Rate (APR). The problem with your Good Faith Estimate is that it is simply an estimate provided by the lender in “good faith.” Mortgage lenders routinely low-ball the fees provided in these estimates because there is no accountability under the Real Estate Settlement Procedures Act (RESPA).

What about the Annual Percentage Rate (APR) you ask? After all the APR is mandated by Truth-in-Lending laws that banks and lenders can’t skirt. Well, when it comes to home loans the APR you receive is based on the figures in the Good Faith Estimate which we already know lenders routinely low-ball. The Annual Percentage Rate is just as worthless when comparison-shopping as your Good Faith Estimate. This is why nearly all your neighbors that approach their mortgage refi hell-bent on comparing every Good Faith Estimate they can get their hands on still overpay thousands of dollars every year.

How to Pay Less for Your Mortgage Refi

You can put thousands of dollars back in your pocket on your mortgage refi simply by avoiding unnecessary markup and junk fees. Sounds difficult, right? It’s easier than you think and you don’t even have to be a personal finance guru to pull it off. Rather than focusing on comparing mortgage refi quotes like your neighbors did until they can’t see straight all you have to do is concentrate on finding the right person to arrange your mortgage refi. This is easy-peasy I promise once you once you know how to go about it.

Avoiding Mortgage Refi Markup

For the purposes of this discussion, I’m only talking about home loans that are arranged by mortgage brokers. I never recommend banks when refinancing because your bank is exempt from the Real Estate Settlement Procedures Act and banks routinely exploit this loophole to bolster their profits at your expense. I mean why would you ever consider taking out a mortgage refi loan with a lender that doesn’t have to play by the rules? You simply wouldn’t.

This doesn’t mean that brokers don’t play dirty when it comes to your mortgage refi which is why it’s so important to find the right broker to arrange your home loan. How do brokers play dirty when it comes to your mortgage? There’s a little known fee paid by mortgage lenders to any broker that locks and closes mortgage refi loans with a higher than necessary interest rate. Avoid this unnecessary markup of your interest rate and you’ll bag yourself a wholesale mortgage rate and keep thousands of dollars of your hard-earned cash in your pocket every year.

You can learn more about avoiding Yield Spread Premium and other junk fees on your next mortgage refi by checking out my free Underground Mortgage Refinancing Videos.


Here’s a quick sample to get you started today by exposing your mortgage refi lender’s dirtiest secret.

Home Mortgages for Dummies

If you’re looking for home mortgages to purchase your home or to refinance your existing mortgage there are several things you need to know about home mortgage rate quotes to avoid paying too much. 2010 has seen some changes to the Real Estate Settlement Procedures Act; however, these changes are still too little too late when it comes to protecting homeowners from abusive lending practices. Here are several of my best mortgage tips to help you get a wholesale mortgage rate for your home mortgages while avoiding unnecessary junk fees and save as much as $1200 per year.

Home Mortgages for Dummies

Everyone wants the lowest mortgage rates for their home loans and the Internet makes it very easy to shop for mortgage rate quotes. One thing that you might not know about those mortgage rate quotes you find on the Internet and get from your local mortgage companies is that they’ve all been marked up to create a commission for the person arranging your home loan. What’s wrong with that you might ask, I mean mortgage brokers gotta eat too right? That’s why you pay an origination fee for the mortgage broker or company arranging your home loan. Origination fees paid out of pocket don’t drive your mortgage payment up, taking cash out of your pocket for no good reason. Do you really want to pay that person’s commission over and over every month that you keep your home loan?

Beware Yield Spread Premium

Driving your mortgage payment up unnecessarily is what taking a higher mortgage rate to pay the broker commission does. One of the changes for 2010 in the Real Estate Settlement Procedures Act is that mortgage brokers have to include Yield Spread Premium with their loan origination fee in your loan documents. This fee for markup of your mortgage rate has always been on the HUD-1 statement; however, shady mortgage brokers explain it away by telling you that because the fee is coming out of the lender’s pocket they don’t need to worry about it. There is nothing in the law now that prevents loan originators from doing this so it’s pretty much business as usual for dishonest mortgage brokers.

How to Avoid Unnecessary Mortgage Rate Markup

The good news for you is that you don’t have to be a financial guru to get a wholesale mortgage rate that doesn’t include this unnecessary markup or junk fees. It all comes down to finding the right mortgage broker for the job, one willing to work for a flat and perfectly reasonable origination fee of one percent. That’s what you want to pay…one percent up front that won’t drive up your mortgage rate and monthly payment for no good reason.

Finding the right mortgage broker for the job isn’t hard either…there are plenty of honest, hardworking mortgage brokers out there with families to feed just like yours. Local mortgage brokers are almost always better… local, self-employed mortgage brokers don’t have the costly overhead that comes with a nationwide company. You can get started by checking out the mortgage brokers in the phone book. Tell them that you understand how Yield Spread Premium works and simply will not accept any mortgage loan that includes this markup. Offer to pay a flat origination fee of one percent and you’ll be well on your way to getting a wholesale mortgage rate for your next home mortgage loan.

You can learn more about Yield Spread Premium and how it drives up your mortgage payment unnecessarily by checking out my free underground mortgage refinancing videos.


Here’s a sample of what you get for free today… this module explains why 95% of your neighbors overpay for their home loans.