With mortgage interest rates at near all-time lows, now could be the perfect time for you to consider refinancing your mortgage. Unfortunately, even if most factors point towards an increase in mortgage refinancing, low appraisals and strict lending rules make it difficult for borrowers to refinance, even with good credit scores and significant assets.
Low interest rates have always been attractive to borrowers. The average interest rate on a 30-year mortgage is under 4 percent right now, at the lowest level in the past 60 years. Before refinancing, you must be aware that a low rate is not the only factor that will decide if you will save money. Low mortgage rates usually come with bigger closing costs, and adjustable-rate mortgages come with a low initial rate that can increase a lot over time.
Tips on Getting the Best Rates
While predicting mortgage refinance rates is difficult, you can take a few steps to make sure that you’re receiving the lowest refinance rates available:
- Boost your credit score. The first thing that you need to do before refinancing is to try to increase your credit score. You’re entitled to one free credit score report per year. Always make sure that all the information in the report is accurate, and correct it if it’s not, by contacting the issuing agency. A credit score of 740 and above is generally perfect for getting the best refinance rates.
- Shop for the best mortgage lenders. It’s more convenient to just refinance with your bank, but only by shopping around you will be able to find the best refinance mortgage rates. The difference between the best and the worst rate can be as high as 1 percent. When looking for quotes, try bankers, mortgage brokers, credit unions, local and national lenders, and make sure you keep an eye on mortgage rates comparison websites.
- Look at fees, not just rates. Low rates usually mean high fees. Question all of the lender’s fees and look out for any unnecessary administrative, processing or courier fees. You’ll only know the true cost of your mortgage after you take everything, from photocopying costs to legal fees, into consideration.
- Having a good relationship with a lender. This can make a difference regarding the interest rates that are offered to you. A great payment record and a high credit score could guarantee you the best interest rate that the lender can offer. On the other hand, borrowers with spotty payment records will be offered less than advantageous interest rates.
Even if interest rates are very low right now, getting the lowest rate possible depends on many elements. Before refinancing, you should take into consideration factors like how likely it is for you to move in the near future, your financial situation, and your financial history. In order to receive the best refinance mortgage rates, you need to understand the process and have everything in order financially.