If you’re looking into refinancing your mortgage, you are probably searching for cheaper rates available in the market.
Just before you move into searching for the best economical rates, you should have a clear set of objectives as to what are your needs and how much you can spend. Once that is determined, you can get a clear picture of what price bracket you are looking at.
We have come up with some steps that will lead you to the lowest refinance rates:
1. You must raise your credit score
A credit score of 700+ puts the borrowers in a good position to bargain for the best rates. Since most lenders require a minimum credit score of 600, you must ensure your credit score is in good shape to get the best rates.
2. Decrease your debt
Lowering your debt by paying out bills on time is one way to go about it. You must make sure that your debt to income ratio is less than 40%. The lower, the better. Don’t make irrational purchases on credit. Pay on cash and be rational in your spending decisions.
3. Organize your financial documents
Keep your financial documents in one safe place. Do not dispose any financial related receipts as they may come in handy later on. Also, they make you aware about how much you are spending vs how much you are earning.
4. Talk to multiple lenders
Once you have all the information you need, you should research on various mortgage lenders who offer cheap rates along with good service. It must be noted that service plays a key factor and one must not be merely enticed by the cheap rates they are getting. By speaking to multiple lenders, you get a better understanding about the market rates and your financial viability. Also, you can negotiate better rates amongst each other.
5. Determine how you will finance your refinance
Once all of the above are done, you must come up with a plan to finance what you are borrowing as it must be paid back. Set a negotiable rate that is feasible for you to easily pay back.
All of the above mentioned steps play a key role in determining the best lowest possible rate for you. Since homeowners insurance is also a necessary, don’t forget to add insurance costs either.