Introduction
The best way in which to get a lower interest rate on your mortgage payments so that your repayments are more affordable is to actually go ahead and refinance your home loan whenever the refinancing rates are low. In order to benefit from refinancing your mortgage in this manner you will need to look for the lowest refinancing rates that are available at that time. You will find that lenders’ requirements for refinancing your home’s mortgage and the criteria for getting new refinancing rates do vary from one institution to another. However, you should know that there are some tricks that you can use in order to bring down the refinancing rate.
Step 1
Before looking for better refinancing rates, you should take some time to increase your credit rating since this will heavily impact the refinancing rates that you will be offered. In order to increase your credit rating you will want to make sure that you always pay all of your creditors on time and that you pay off all of your old credit card debt. If you are not sure of what your credit score is right now, you should get it from the My Fico web site. By law you are entitled to 1 free credit report from each of the 3 major credit reporting bureaus each year. Whenever you receive a copy of your credit report you will want to make sure that your credit score is at least 680. If it is not already at this point, you should wait until it is before you go ahead and apply to refinance your home loan so that you will get the best refinancing rates possible.
Step 2
Talk to your current home loan lender. He may be able to offer you the best refinancing rates just because he wants to retain you as a customer. However, it never hurts to ask a mortgage representative for a free quote too. If you have a good payment history, you will be able to get better refinancing rates for your home loan.
Step 3
Look for other lenders. Even though your current lender may offer you the best deal, you will not want to forego comparing the rates with at least 2 or 3 other lenders. If you want to make your comparison-shopping quick and easy, you will want to use a mortgage broker.
Step 4
Whenever you get a new mortgage loan you will want to pay off the mortgage points right away. Sometimes you will actually be able to get an even lower mortgage refinance rate if you are willing to agree to pay the discount points at the time of closing. This extra fee will cost you 1% of your mortgage loan (1 point equals 1% of your mortgage balance). Each point will cut your interest rate by .25%.
Step 5
It is important to attempt to anticipate any closing costs whenever you are refinancing your home loan. If you do not already have the cash readily available, then you will want to ask your lender to roll the fees into your new mortgage balance.
Tips
Take time to shop around. In doing so you could be saving yourself quite a bit of money.
Sources and Citations
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