Five Steps to Finding the Best Refinance Loan
January 26, 2010
Anyone perusing Money-Rates.com's current mortgage rates can see that financing for homes continues to remain at historic lows.
HSH Associates, which tracks average "street rates" for various mortgage products, publishes three-year trend charts for 30-year fixed rate mortgages and 15-year fixed-rate mortgages. Though both mortgage rates are on the rise, they are still far below historical averages.
Current Mortgage Rates Can Help Your Bottom Line
With 30-year fixed mortgage rates still quite low, you might be able to refinance and save money on monthly payments. In addition saving money, lower payments can make it easier to qualify for a home loan. Considering that Fannie Mae announced that their debt-to-income ratios will now be capped at 45% regardless of compensating factors, low mortgage rates could be the difference between refinancing your home loan or not.
Getting Your Refinance Approval
To find the best refinance loan, follow these steps:
- Ask an appraiser for a "comp check" on your home. A "comp check" gives you an idea of how much your home is worth based on the sales price of other homes in your area. Keep in mind that a "comp check" is not a full appraisal; it only gives an estimate of your home's value.
- Manage your credit score. Check with the three credit reporting companies (Equifax, TransUnion, and Experian) to see if your credit score qualifies you for the lowest mortgage rates. Checking your credit score also allows you to see if your credit reports are accurate. If you see any discrepancies, immediately contact the credit reporting agency so changes can be made. The best refinance rates can be obtained with a credit score of 720 or above.
- Fill out several loan applications. Filling out one or two applications may not be enough to guarantee that you get the best mortgage rate and loan terms. A rule of thumb is to choose at least three loan officers that offer loans from different banks.
- Compare refinance rates across different lenders. You can obtain quotes for the best mortgage rates easily online.
- Select the loan with the lowest rate and terms. The mortgage rate is of course important, but the terms should fit your situation. Trust and service levels are also important; you should feel that your mortgage professional is accessible. You should make sure that you fully understand the interest rate, the monthly payments that you need to make, and the costs associated with the loan.
Searching out your various options will take some time, but in the end it will save you a great amount of money.
Source:
Fannie Mae Market Support Updates and DU Version 8.0 • http://https://www.efanniemae.com/lc/newsletters/sfnews/1009du.jsp
