Getting the best mortgage rate possible when you refinance can save you a bundle and help you dig out of debt that much faster. Follow these 6 easy steps to help you find the ideal interest rate for your refinance situation:
1. Set a target interest rate: Determining your ideal mortgage refinance rate gives you a goal for which to strive. Check out current interest rates and use this information to decide on your desired rate. Setting a target keeps you motivated and gives you something to celebrate if you succeed.
2. Get several quotes: The first quote you get for refinancing may not be the best. Obtaining several quotes gives you a good basis for comparison. If possible, get Good Faith Estimates (GFEs). These documents include closing costs that enable you to make accurate comparisons.
3. Consider various loan scenarios: When gathering quotes, ask lenders to give you the specifics for a variety of potential loans, such as an ARM and a 30-, 20- and 15-year fixed.
4. Compare quotes: Take a close look at all the quotes and separate out the best ones that are closest to your target interest rate. Pay careful attention to closing costs, as points can negatively affect what seems like a good rate.
5. Check with your current lender: With your best quotes in hand, contact the company that already has your loan and may be motivated to keep it. Let the loan representative know about your quotes and see if the company can do better. Some lenders have specific programs tailored for current borrowers that offer debt reduction solutions.
6. Consider pre-approval: If your search for an ideal refinance interest rate isn't as successful as you'd like, or you think that the rates may improve in the near future, get pre-approved now for refinancing so that you're poised to quickly take advantage if the rates do drop.
Obtaining your ideal interest rate is a worthy goal that can help with debt, but it takes doing your homework. Knowing the steps to achieving your target rate makes the task easier and more productive.
About the Author:
Julie Bawden-Davis is a Southern-California-based writer specializing in personal finance and insurance. Since 1983, her work has appeared in a wide variety of publications, including Family Circle, Ladies' Home Journal, Parenting, Entrepreneur and The Los Angeles Times.