How to Get the Lowest Refinance Rates
If you are looking to refinance your mortgage, you will definitely want the lowest refinance rates. Before you shop around, experts say that you should understand your objective and prepare yourself and your finances to improve the way your application is viewed by the lender.
According to Michael Jablonski, EVP for BB&T Mortgage in Wilson, North Carolina, he said: “First, figure out the best loan product to meet your financial goals, and then you can start looking for the most competitive mortgage rates.”
Some of the steps below will be simple and will help you to lock in the lowest refinance rate while other steps may take a bit more effort.
Here we discuss 3 easy steps to help you obtain the lowest refinance rates.
1. Polish Your Credit Score
Jason Walowitz, President of United Financial Counselors explains that “The higher your credit score, the better chance you have of obtaining the lower interest rate. Good credit is considered having over a 700 credit score. It is best to pull your credit beforehand on a credit monitoring site (example: www.united.procredit.com) so that you can view all 3 bureaus and check your current scores.
He also emphases correcting any errors that you have on your report. If your report has incorrect information, the correction could increase your credit score.
2. Lower Your Debt
Did you know your debt-to-income ratio could improve your chances of getting lower refinance rates? How do you improve your DTI ratio do you ask? The easiest way to improve your DTI ratio is by paying your bills. Make sure you that you pay all credit card payments on time and keep your balances low.
Something to remember: even if your credit score is high enough to qualify you for the lowest refinance rates, you may be denied altogether if your DTI ratio is too high.
A good rule of thumb: Debt-to-income ratio should not be more than 46%, and even lower is fine.
Jason added: “Do not make any large item purchases such as a new car, any appliances, or recreational vehicles such as boats/jetskis ect. Also, do not make fill out multiple credit applications before you refinance because all of those actions can hurt your credit profile.”
3. Keep Proper Documentation
Documentation is not directly related to your mortgage rate but can help you speed up the process. Before you apply for a refinance, be sure to gather your credit reports from all three major credit bureaus, your last two years of tax returns, two months of recent bank statements, two months of recent pay stubs, and any investment statements. Also make sure you have all of the original mortgage paperwork. This should include the mortgage note, any home insurance, Homeowners association information, and any statements from your lender.
Assembling these materials ahead of time can expedite the loan process and prevent you from paying extra for an extension of your rate lock.
Should you have any questions about refinancing your mortgage, please give United Financial Counselors a call at 954-372-4370 or online at www.unitedcounselors.org.