Compare Current Mortgage Refinance Rates

Compare Current Mortgage Refinance Rates

Dream Cheeky will help you know Can You Refinance A Fixed Rate Mortgage 2022: Best Guide

3 Steps to Get the Lowest Refinance Rate

The main goal of most mortgage refinances is to lower your interest rate and maximize your savings. Naturally, the lower the rate the bigger the savings.

But just because lenders offer a certain rate doesn’t mean you’ll necessarily qualify for it. Often lenders will publish their lowest rate available, but those rates are reserved for borrowers who tick several boxes, like holding a high credit score and a low loan-to-value ratio.

Borrowers can put themselves in the best position to get the lowest rate by doing these three basic things:

1. Raise Your Credit Score

If your credit score is below 760, then you might not qualify for the very best rate lenders offer. That doesn’t mean you can’t get a lower rate than what you currently have, but there is room to improve your score and boost your savings. Before you apply for a mortgage refinance, check your credit score and get a copy of your credit report.

If you find any errors on your credit report, be sure to report them to both the credit bureau and the business that made the error as soon as possible. Both parties must correct the information in order for it to change on your credit report and be reflected in your credit score.

You can bump up your credit score by paying off credit card debt and reducing how much you use your cards. If you do use credit cards for rewards and points, try to pay them off immediately—don’t wait for your monthly statement to come in because your score can change daily.

Avoid applying for new lines of credit before you apply for a mortgage refinance, as credit applications can bring down your score. However, submitting multiple mortgage applications in an effort to get the lowest rate possible won’t hurt your score.

Credit bureaus count multiple mortgage applications within the same period of time as just one application because they recognize that activity as comparison shopping, rather than trying to open multiple lines of credit.

2. Shop Around for the Best Rate

The second step in ensuring you get the best rate available to you is to shop around. Make sure you compare the APR between lenders, not just the rate. The APR is the all-in total of your mortgage costs, which can vary by lender, and will include your closing costs if rolled into your loan.

You should compare offers from at least three lenders before making a decision. But when comparing the interest rate and APR, consider these two scenarios:

If you plan to stay in the home for an extended period, getting the lowest mortgage rate can be more important than paying the lowest closing costs.

If you don’t plan to stay for more than a couple of years, you should look closely at the lender’s loan estimates, which will show you the projected five-year cost. Choose the offer with the lowest initial price tag.

3. Keep Your Loan-to-value Ratio Low

Finally, the lower your loan-to-value ratio is, the lower your interest rate will be. If you don’t have to take cash out of your home when you refinance, you might want to avoid doing so as that will bump up your LTV and likely result in a higher interest rate.

The loan-to-value ratio measures the amount of financing used to buy a home relative to the value of the home. Maximum LTVs permitted when refinancing vary based on the type of property you’re refinancing, whether the loan is a fixed-rate or an adjustable-rate mortgage (ARM) and whether you’re doing a standard refinance or a cash-out refi.