4 Tips for Comparing Refinance Rates

May 7th 2016

Discuss your refinancing options with a financial adviser or accountant to sort through the available choices. In general, you should aim for a higher credit score, more credit history with the current mortgage, lower interest rates and your home's value with regards to future payments and the total value of the refinance.

Talk Your Original Lender

It makes sense for you to discuss refinancing options with your original lender who owns the loan to your property. The lender already has your loan payment history, payment amounts and vital information on file. Update any changes in income since the lender last examined your finances. The company that owns the original mortgage may run a credit check to see if your credit score has improved since owning the home. Does your lender have a refinance loan package that meets your needs? Can you handle doing business with this lender again? Start with your lender and then branch out to other financial institutions.

Look at Raw Interest Rates

Take a look at raw interest rates for loans offered by your lender and others. A 30-year, fixed-rate refinance at 4 percent looks good, except you keep your debt longer than the original mortgage. The point of refinancing remains trying to get out of debt faster and save money. A 15-year, fixed-rate note at 3 percent may look very attractive if your home loan is more than 5 years old and you've got more money on hand. You may have to pay more money per month, but you pay less interest since the loan matures faster. Your interest rate largely depends on your credit score.

Examine APR

The annual percentage rate, or APR, denotes precisely how much the refinanced loan costs you every year. The APR takes into account fees and interest costs over the life of the loan. Obtain an itemized list from each loan offer. If you can eliminate or reduce fees by refinancing, you have an opportunity to save money.

Do Your Own Research

If you find yourself frustrated with local lenders or you want another opinion, several online resources have rate comparison tools. These programs compare interest rates, APR, principal, interest and terms from several lenders. The software takes into account your location, type of loan product and the loan amount you wish to obtain. Some programs also use your credit score range to give you a more accurate payment structure.

Conclusion

When you decide to refinance your mortgage to try to lower your monthly payment, consider several aspects of the loan. The process to refinance a house remains similar to when you first got a mortgage for the home, only this time, you have the credit history of your home mortgage on your side. Consider these four tips to find the best refinance rates.

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