In finances, as in life, timing is everything. For example, savvy homeowners who have been around the block once or twice know that refinancing a mortgage can be a smart way to cut back on monthly mortgage payments. Still, refinancing at just any old time does not always make sense. Rather, the conditions need to be right for refinancing to be justified.
The potential benefits of doing a mortgage refinance loan are many, including the opportunity to: lower your monthly payments, reduce the total interest payments made on the loan over time, and/or pay the loan off sooner.
However, as mentioned above, conditions have to be right for it to make sense to go through with a refinance. Conditions that make the decision to refinance your home loan potentially a good one include: average interest rates are down, your credit score is up, you have equity in your home that you want to cash out, or you want to increase or decrease your repayment period.
If you are looking for the best mortgage rates for refinancing, here are 5 tips for getting the best rates:
- Understand how interest rates are set: Average interest rates for home mortgage refinancing loans are tied to the yields on Treasury notes (for fixed-rate mortgages) and the Fed funds rate (for adjustable-rate mortgages). Of course, the particular rate you are offered is also a function of your credit score - and the lenders with whom you choose to apply.
- Find out your current credit score: Start the process by finding out your credit score. It is good to know what your current score is before you start the process. Check with all three of the major reporting bureaus, since your score will vary a bit from one to the next.
- Prepare the required documentation: During the refinancing process, you may be asked to verify your current income and employment status. Prepare any such documentation in advance to make the process more smooth.
- Sharpen your negotiation skills: Everything in life is a negotiation. You can sharpen your skills by learning that, for example, the final offer you receive from any given lender is not necessarily final. Always go back and ask again.
- Keep shopping until you reach the point of information saturation: Seasoned researchers and negotiators talk of something called information saturation. This is the point in your loan application process - usually after applying with 3 or 4 lenders - that you realise you have a realistic idea of what type of interest rate you can qualify for. At that point, negotiate once again, then move forward with signing the loan.
Consider these 5 refinancing tips as you look for the best mortgage rates for refinancing your home. If you're looking for a trusted mortgage broker in Campbelltown that can assist with any mortgage rates services, consult Lendium today!