Millions of borrowers are seizing the opportunity to refinance their mortgages due to historically low-interest rates resulting from the COVID-19 pandemic. However, the surge in applications has caused delays in the refinancing process, with processing times extending to six to eight weeks.
While it is crucial to act swiftly to secure favorable rates, it is equally important to ensure that you obtain the best possible rate. Additionally, since all mortgage refinances filed after December 1, 2020, are subject to an adverse market fee, there is no need to rush your application submission before a specific deadline.
To provide further motivation for careful consideration, the Federal Reserve has indicated that they are likely to maintain near-zero interest rates until at least the end of 2023. This extended timeframe allows ample opportunity to explore multiple lenders and review various offers before making a decision.
Is it advantageous to refinance with your current lender?
In short, it may not necessarily be more advantageous to refinance with your existing mortgage lender. While the convenience of sticking with your current lender might be tempting, solely considering convenience could result in a costly mistake.
When working with your current lender, their primary focus is often on retaining your business, but this does not guarantee that they will offer the best terms. While they may offer a lower rate than your current one, assuming you are content with their convenience, it is crucial to assess the deal comprehensively.
If you believe it is time to refinance your mortgage, it is advisable to run the numbers and compare rates from multiple mortgage lenders, such as through platforms like Credible. Gathering all the relevant information, including lender fees and associated costs, will enable you to make an informed decision regarding whether switching mortgage lenders is in your best interest.
Is it beneficial to switch to another mortgage lender? With new lenders competing for your business, they often offer better incentives for refinancing. While your current lender may still provide a competitive offer, it is wise to compare rates from at least three different lenders to ensure you are getting the best deal.
When comparing rates from multiple lenders, it is essential to engage in conversations with them. Platforms like Credible can assist in exploring various refinance options and comparing rates and lenders. However, it is crucial not to rely solely on advertised rates. Take your research a step further by obtaining personalized quotes based on specific information such as property value, equity, and credit score.
WHO IS EXEMPT FROM THE NEW MORTGAGE REFINANCE FEE?
While spending additional time obtaining quotes from lenders may require some effort, investing a few hours in thorough research could potentially save you tens of thousands of dollars on your loan.
How can I qualify for the lowest rates?
As a consumer, you have some control over the mortgage rates you qualify for. While you cannot control market conditions, there are at least three actions you can take to improve your chances of securing the best rates possible.
- Compare rates and lenders
One of the simplest ways to save on your mortgage refinance is to explore options from multiple lenders. Interest rates and fees can vary significantly among companies and locations, so engaging with several lenders or negotiating terms with your preferred choice can result in substantial savings. Online tools like Credible enable you to conveniently compare rates from multiple lenders in one place.
- Choose a shorter loan term
Opting for a shorter-term loan often leads to lower interest rates, as it is perceived as less risky by lenders. Currently, the average interest rate for a 30-year fixed-rate loan is 2.67%, while a 15-year fixed-rate loan has an average rate of 2.17%, according to Freddie Mac. Although your monthly payments will be higher, the potential savings from paying off your loan faster can amount to tens of thousands of dollars.
Credible can assist with all your refinancing needs, including exploring the option of switching to a shorter loan term. Simply provide some basic information about your current loan, and discover what lenders have to offer.
- Improve your credit score
Borrowers with high credit scores and a healthy credit history typically qualify for the best interest rates. Enhancing your credit score can be achieved by reducing consumer debt, consistently paying bills on time, and rectifying any errors on your credit report.
If you have recently paid off debt, consider including monthly payments such as utilities and cell phone bills on your credit report. Making these additional payments promptly each month can result in a boost to your credit score.
By visiting platforms like Credible, you can obtain prequalified rates from multiple lenders without negatively impacting your credit score.
