4 Tips for Getting the Lowest Mortgage Refinance Rates

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Many homeowners have been going for mortgages to curb financial restraints. However, over the years’ mortgage rates have dropped to a record-breaking low, especially during the coronavirus pandemic. The situation hasn’t improved yet and mortgages are still a great option for existing homeowners, especially those who are struggling financially. The market is full of banks and lenders that claim to have the best refinance rates. It can be difficult settling on the right lender, but according to SFGate, it is possible to find some of the best lenders in the market.

With the provision of a loan refinance, many homeowners are able to save hundreds per month and thousands per year on their mortgage payments by taking advantage of lower mortgage refinance rates. For those who’ve either lost their jobs or anybody facing some form of financial struggle, refinancing your mortgage can lighten the load. Here are 4 tips to getting the lowest mortgage refinance rates.

1. Improve your credit score

Your credit score plays a huge role when it comes to getting the best mortgage rates. Those with the best credit scores tend to be the ones that receive the best mortgage loan rates. You can always check out your credit score to see which deals you can get from your score. Your score will help you to know what kind of mortgage and the lowest refinance rates you qualify for.

Your credit score will inform the lender about your spending habits and whether you are capable of managing credit well. This will determine how good you will be at handling credit in the future once they give you the mortgage. If you have a very low credit score, it’s best to give it a few more months or years to boost it before applying for your mortgage refinance. Most mortgage lenders view a high credit score as an indicator that you can manage your credit and can repay your loan as agreed. This increases your chances of getting lower interest rates on a mortgage which is good for your finances since you will pay less than the expected amount.

If your credit is low or not even close to the expected score that qualifies you for a mortgage, you will need to improve your credit score before applying for a new mortgage loan. You can do this by making all your payments on time. Ensure that any bills are paid before the deadline. Always keep your balances low, at least below 30% and pay any pending credit balances you might have. Avoid getting a new credit card or loan just before you apply for a new mortgage.

2. Check your credit report for errors

Credit report errors are not new and they can happen sometimes. It’s therefore best to check your report for any mistakes that could have been made. In case you come across any errors, report them early before applying for a mortgage. By wiping any errors from your credit history you might just be able to improve your score.

3. Pay off pending debts

Pay any pending debts and settle any overdue accounts. Lesser debts allow you to have more cash to handle your mortgage payments, closing costs and any other costs that come with a mortgage refinance. It also gives you a better chance of getting a good deal with a lender. Avoid new debts which will hurt your credit score and chances of getting lower mortgage rates.

4. Compare rates, closing costs and other terms

Different lenders have different rates, terms and fees that vary widely from one mortgage lender to the next. One lender’s terms might also differ from another and it’s important to compare several options to determine which is the best and cheaper option available. Get at least five quotes from five different lenders. It might just save you from spending thousands which could have been avoided.

Once you’ve decided on the best lender, calculate any debts you might have no matter how low they might be. This is done using the debt to income calculator which compares how much debt you need to pay for each month to how much you earn. Calculate the monthly take-home pay your debts account for to get a better deal from the lender and determine what loan products you’re eligible for and their rates. For higher chances of getting a great refinance deal, you can also find a way to increase your income. This might either be a side job, freelancing gig or a raise from your boss. The higher your income is, the lower that debt-to-income ratio.