Amid the coronavirus pandemic, millions of prospective buyers are eagerly capitalizing on historically low-interest rates. However, the surge in demand has led to delays in finalizing mortgage refinances, extending the processing and completion time from the typical 30 days to six to eight weeks.
While speed is important to seize the opportunity of securing the lowest rates, it is equally crucial to ensure that you obtain the most favorable rate possible. Additionally, since all mortgage refinances filed after December 1, 2020, are subject to an adverse market fee, there is no urgency to submit your application by a specific deadline.
To further emphasize the need for careful consideration and research, it is noteworthy that the Federal Reserve has indicated its intent to maintain near 0% interest rates until at least the end of 2023. Although rates may increase before then, you have ample time to consult with multiple lenders or evaluate various offers before making a decision.
Considering Refinancing: Exploring Options Beyond Your Current Lender
In the quest for refinancing, it may not necessarily be advantageous to stick with your current mortgage lender. Although it may seem tempting to opt for convenience and apply for a refinance with the familiar lender, disregarding other options could prove to be a costly mistake.
While your existing lender may prioritize retaining your business, it does not guarantee that they will offer you the most favorable terms. They may provide a lower interest rate than your current one, assuming that you will accept it due to the convenience factor.
If you believe it is time to refinance your mortgage, it is crucial to run the numbers and compare rates from multiple lenders. Utilizing platforms like Credible can facilitate the process of obtaining quotes and evaluating various mortgage lenders, including their associated fees and costs. By gathering comprehensive information, you can make an informed decision regarding whether switching mortgage lenders is the right choice for you.
Is it worth exploring other mortgage lenders?
Alternative lenders are actively competing for borrowers’ business, making them more inclined to offer attractive incentives for refinancing. While your current lender may still be a contender, it is recommended to compare rates from at least three different lenders.
During the rate comparison process, it is important to engage in discussions with the lenders. Platforms such as Credible can provide an avenue to explore various refinance options and compare rates and lenders. However, it is essential to go beyond the advertised rates and obtain personalized quotes based on your specific information, such as property value, equity, and credit score. Taking this extra step will provide a comprehensive view of the available options and assist in making a well-informed refinancing decision.
Qualifying for the Lowest Mortgage Rates: Strategies and Considerations
When seeking the most favorable mortgage rates, there are several factors within your control as a consumer. Although market conditions are beyond your influence, you can take specific actions to maximize your chances of securing the best rates possible. Here are three essential steps to consider:
- Compare rates and lenders
One of the simplest ways to save on your mortgage refinance is to explore multiple lenders. Interest rates and fees can vary significantly among companies and even locations. By engaging with multiple lenders and negotiating terms, you have the potential to save thousands of dollars. Online tools like Credible provide a convenient platform to compare rates from different lenders, allowing you to make an informed decision.
- Choose a shorter loan term
Opting for a shorter-term loan can result in lower interest rates, as they present a lower risk for lenders. Currently, the average interest rate for a 30-year fixed-rate loan is 2.67%, while the average rate for a 15-year fixed-rate loan is 2.17%, according to Freddie Mac. Although choosing a shorter loan term leads to higher monthly payments, the potential savings can amount to tens of thousands of dollars by paying off the loan faster. Credible offers assistance in refinancing, including exploring options for shorter loan terms based on your current loan information.
- Improve your credit score
Borrowers with high credit scores and a solid credit history are eligible for the best interest rates. Enhancing your credit score can be accomplished through various strategies, such as reducing consumer debt, consistently paying bills on time, and rectifying errors on your credit report. Additionally, including monthly payments like utilities and cell phone bills on your credit report can positively impact your credit score if paid on time each month.
To explore prequalified rates from multiple lenders without impacting your credit score, you can visit Credible.
By implementing these strategies and considerations, you can increase your chances of qualifying for the lowest mortgage rates available, potentially resulting in significant savings over the life of your loan.
