4 Tips for Getting Best Home Mortgage Loan Rates On Refinancing
It is imperative to get the best refinance home mortgage loan rate so that you can save a lot of money and can make the payments comfortably. This article highlights 4 smart tips that can help you in the best home mortgage loan rate on refinancing.
Tips to Get Best Mortgage Rates on Refinancing
The 4 tips that can help you in getting the best to refinance home mortgage loan rate are given below:
1. Maintain Your Credit:
A decent credit rating makes you a desirable borrower to the lender. A lender will regard you as someone who is a responsible borrower. This implies that the lender will get his money back as agreed. As a reward for your reliability, the lender will offer you the best refinance home mortgage loan rate without any fuss.
2. Never Make Late Payments:
If you want the best home mortgage loan rate on refinancing, then you should not make late payments on your existing loan. Making late payments or missing any payment will alert your lender that you may not be a trustworthy borrower. If you’ve made payments on time for at least 1 year, then you might expect to get a low mortgage to refinance the rate.
3. Consider Shortening Your Loan Period:
If your existing mortgage is a 30-year loan, then think about shortening it to 20 years or 15 years provided you can afford it. This will certainly raise your monthly payments but you’ll overall interest paid over the loan period will be less. This is because lenders offer low mortgage refinance rates on shorter-term loan schemes.
4. Shop Online:
There are various sites that show current refinance and mortgage rates free of cost. Thereby, you can compare the rates offered by different lenders and can make the best deal. You can even check your local paper to know about any major interest rate fluctuations.
Finally, when you have found a low mortgage refinance rate, ask your lender to give you a written agreement. You are required to show evidence that you have been offered that exact interest rate. This document will enable you to take advantage of best refinance home mortgage loan rate provided you have obtained the loan within the closing period.
How Do I Know if I’m Getting the Best Mortgage Rate?
A home mortgage is a loan that many people pay on for decades. The payment is often one of the biggest expenses in a person’s budget. Refinancing is possible, but it does take time, effort, and often the payment of fees to accomplish. So taking steps today to ensure you have the best mortgage rate while applying for a mortgage can help to save you money on your mortgage payment for years to come.
Understanding the basics of mortgage interest rates is a key element to determining if you are getting the best mortgage rate. Interest rates will vary slightly from bank to bank and lender to lender. However, in general, you will find that a thirty-year fixed term receives the highest interest rate while a 1/1 ARM or a similar product will receive the lowest interest rate. A fixed-term generally has higher interest rates than an adjustable term, and a longer-term period generally has higher interest rates than a shorter term.
Further, interest rates can be bought down with points. A point is a single percentage point of the overall loan amount. So a point on a $100,000 loan amount would equate to $1,000. This buy-down fee will have a different effect on the rate depending on the lender. For instance, with one lender, one percent buy down fee may reduce the rate by half percent while this same fee may only reduce the rate by a quarter percent with another lender. Some banks and lenders may have this fee rolled into your overall loan fees while others may quote lower fees and a higher interest rate. To determine if your rate is being bought down, you should ask your bank or lender directly.
It can be difficult to determine what the best rate structure for a loan is without looking at the interest that will charge over the life of a loan. Your bank or mortgage professional can prepare a spreadsheet for you that itemizes interest charges for several different loan options. For instance, this can be prepared for a 30 year fixed rate and a 15 year fixed rate loan, both with and without a one percent buy down fee. This analysis can help you to most easily determine which loan is the best deal for you.