If you’re seeking ways to secure the best mortgage refinance rates, look no further. The Federal Reserve’s emergency rate cuts in March have had a significant impact on mortgage rates, resulting in record-low interest rates by May. Refinancing your mortgage at a lower interest rate can lead to substantial savings on your monthly payments and potentially shorten the loan term.
However, it’s important to recognize that there is no one-size-fits-all approach to refinance rates. Conducting a thorough rate comparison is crucial to finding the lowest rates available. Utilizing online tools provided by Credible, such as their mortgage lender comparison platform, can help you compare rates and save money not only on your monthly payments but also in the long run. Checking personalized rates is a quick and hassle-free process, taking only three minutes, and it won’t have any impact on your credit score.
5 Strategies for Obtaining the Lowest Mortgage Refinance Rates
When considering a mortgage refinance, securing the lowest rates can result in significant savings. Here are five effective strategies to help you achieve this goal.
- Compare Rates and Multiple Lenders
To find the best mortgage refinance rates, it’s crucial to compare rates from multiple lenders. Utilize the services of Credible, which allows you to easily compare lenders and find the most suitable option that aligns with your financial objectives. By doing so, you can determine the potential savings you could achieve by refinancing your loan amount.
- Boost Your Credit Score
A strong credit score is essential for securing favorable refinance rates. Prior to beginning the application process, ensure that your credit score is in good standing. Mike Dulla, president of United Home Loans, recommends a credit score of 740 or higher for the best rates on conforming refinances. Taking steps to improve your credit score, such as paying bills on time, requesting a higher credit limit, keeping credit card balances low, and rectifying any errors on your credit report, can enhance your eligibility for favorable rates.
- Lock in the Lowest Mortgage Rate
Given the current market volatility, it’s crucial to secure a low mortgage refinance rate. To achieve this, consider the following measures:
- Shop around and utilize Credible’s online tools to compare multiple lender offers and determine the rates for which you qualify.
- Focus on building your credit by making timely credit card payments, maintaining low credit card balances, and refraining from new credit applications until you’re confident in your credit score.
- Act promptly by accepting the loan offer once approved to avoid potential rate changes.
- Note that rate locks typically last around 30 days, ensuring that your rate remains consistent from the offer stage to loan closing.
- Determine Your Home Equity Position
A favorable loan rate can be obtained with a higher home equity position. Aim for at least a 40 percent home equity position (60 percent loan-to-value) to secure the best rates. While loan-to-value ratios of 95 percent or lower can still yield excellent rates, the more equity you have in your home, the better the terms you can secure.
- Consider Changing Your Loan Term
As part of the refinancing process, reassess your loan term to better align it with your financial situation. Factors to consider, as advised by Mike Dulla, include:
- Considering a 15-year fixed-rate mortgage for potentially lower rates.
- Avoiding cash-out refinancing, as it may lead to higher costs.
- Being cautious of points and other high closing costs associated with the refinance.
- Ensuring stable employment, as lenders are required to verify employment status shortly before closing.
- Acting promptly without unnecessary delay to take advantage of current favorable conditions.
Ultimately, refinancing now can be a prudent decision. However, conducting thorough research and utilizing Credible’s free online tool to assess potential savings is crucial. By crunching the numbers, you can determine the financial benefits of a mortgage refinance tailored to your specific circumstances.