4 Tips To Get The Best Refinance Rate
When mortgage rates are low, you can reduce your monthly mortgage payment by refinancing to a lower interest rate. If you can lower your current interest rate by a half percent, it could be worthwhile to exchange your existing home loan for a new one. Here’s how to get the best refinance rate.
Take Your Credit Seriously
Make sure you are paying bills on time, especially your mortgage payment, in the months leading up to your application for a refinance loan. That way you’ll have the best possible credit score. The better your credit score, the lower your interest rate. Also, don’t open or close any other credit accounts during this time. This could lower your credit score. Paying off large portions of debt will help raise your score, as well. If you can reduce that debt-to-income ratio, you can score a lower interest rate.
Shop Around For Different Rates
Start gathering rate quotes with your current mortgage lender. That financial institution has an interest in keeping your business and might offer you an appealing rate. Then, research lenders in your area. This includes smaller banks and credit unions. Sometimes, a lender that is trying to grow in your area will offer a good deal on your rate to win you over as a customer. Also, check lenders specializing in the type of property you own. Some lenders specialize in high-rise condos or beach communities and might offer you a better rate because they are more comfortable with your property. Ask lenders about fees and closing costs so you can determine whether your refi will actually save you money in the long run.
Consider A Shorter Loan Term
If you have a 30-year mortgage and you’ve had it for several years then refinance into another 30-year loan, you’ll drag out your mortgage debt and interest rate payments over a longer period of time, unless you sell the house before the end of your term. Instead, you could choose a shorter-term refinance, such as a 15- or 20-year mortgage, and retain a lower interest rate. Keep in mind that a shorter-term loan will come with a higher monthly payment. You also might consider refinancing a fixed-rate loan into an adjustable-rate mortgage. These usually come with lower interest rates during the initial years before the rate starts adjusting.
Know When To Jump on a Rate
Mortgage rates fluctuate daily so you have to get the timing right and know when to lock in a rate. Work with a loan officer who understands how rates are performing and can help you snatch up a low rate.
Contact First Ohio Home Finance for all your refinancing needs and questions!
