Obtaining a mortgage refinancing has several benefits. However, the only way to realize these benefits is to qualify for a low rate mortgage. Even though refinancing a home is ideal for securing a fixed rate mortgage, without acquiring a lower rate, you may not save on your monthly mortgage payment. If you are hoping to obtain a low rate mortgage, there are steps you should take.
Establish a Good Payment Record with Existing Mortgage Lender
When applying for a refinancing, the mortgage lender will carefully review your credit and assess your payment history with current mortgage lender. Individuals with a good payment record can expect a low rate on their refi – especially if their credit score is high. On the other hand, if you have poor credit, and have submitted several late mortgage payments, a refinance lender may consider you a risky applicant.
Risky applicants may have their refinance application denied. If the application is approved, the lender will likely remit an offer with a high interest rate. In this instance, refinancing is not very beneficial. The ultimate goal is to save money. However, if the savings are minimal, it is not worth the costs to refinance.
If you are contemplating a refinancing, attempt to submit all mortgage payments on time. Furthermore, reduce unnecessary debts, which may boost your credit rating. Homeowners with a good credit score have a better chance of securing a low rate refi.
Compare Various Refinance Mortgage Lenders
Making a side-by-side comparison of various mortgage lenders is very effective. After requesting a mortgage quote, lenders assess an applicant’s situation and make them an offer. Lender offers will vary. By comparing lenders, you have the power to select the loan package with the lowest refi rate. Those who neglect comparing lenders risk accepting a bad refinancing offer.
Refinance When the Time is Right
Because of declining mortgage rates, many homeowners are jumping on the refinance bandwagon. However, now may not be the right time to create a new mortgage. Prior to applying for a new mortgage, you should consider a few factors. How long do you plan on living in the home? Will a refinancing create a noticeable savings? What is your credit standing? Do you have the funds to pay closing costs?
Refinancing while rates are low is great for obtaining a low, fixed rate mortgage or lowering monthly payments. However, if your current rate is comparably low, or you anticipate a move in the near future, refinancing may not be the wisest choice.