Want a Better Interest Rate? 5 Things To Remember When Refinancing Your Home
Wednesday, May 28, 2014, 1:00 PM | Leave Comment
Many homeowners do not realize the difference between a good rate and a great rate over the long run. Most homeowners settle for the interest rate offered by the lender, provided the new monthly payment appears to be an attractive one.
However, a slight change in the interest could save you thousands of dollars over the life of a loan.
Rala Investments Ltd a mortgage broker in Vancouver has said there are many things you can do to get the best rate from a lender.
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Shop for Lenders with the Best Rates
Today, there are many real estate websites such as Zillow.com that will allow you to search for lenders. You can search using parameters such as loan amount, percentage of down payment, loan type, purchase or refinance, total income, total debts and credit score. The results will show you the lenders offering the best rate with the lowest closing fees.
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Choosing the Right Mortgage Company
It is important to choose the right mortgage company for your loan. If you go with your local bank or a money center bank such as Chase or Bank of America, you might get the best service; however, you might end up paying higher interest rates. Your best bet is to find an Internet based lender with good customer reviews.
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Your Credit Score
Your credit score is the single most important factor that decides the rate of your loan. If you have a credit score above 760, then you will get the best possible rate. Your lender will run your credit and find out the credit scores from each of the credit reporting agencies. You must work on improving your credit score, before approaching lenders.
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Do not Apply for New Credit Lines
If you are planning to apply for a refinancing loan, then do not open any new credit for purchasing a car or home improvements. Any new credit inquiries will lower your credit score. This will affect the interest rate offered by lenders.
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Loan to Value Ratio
You can save money towards improving your loan to value ratio. Most lenders offer the best rate if your loan amount is 80% or less. If you do not have at least 20% equity in your house, then you must save enough money to reduce the loan amount to 80% of the home value.
If you are planning to refinance, you must focus on getting the best interest rate. The above tips will help you get the best possible rates. If nothing works, then you can always bargain with the lenders for a lower rate!
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