Speaking of home loan refinance rates, the amount of the rates is actually varying and affected by multiple reasons. There is one fact that you should learn. The possibility for you to get the lowest rate is very small compared when you look for the loans to finance your dream house for the first time. Therefore, you have to establish your objectives and also improve your qualifying to get the lower interest rate.
Good Credit Score for Lower Rate
Raising your credit score is the first thing you can do to get start the shopping for lower interest rate. Usually, the minimum score should be 740. But if you can score more than 740, it is more likely for you to get the conventional loan program with much lower interest rates. But if your score is only around 600s, it is more likely for you to pay higher interest rate. Therefore, make sure to maintain good credit score throughout your loan term.
Another tip to get lower rates is by lowering your debt. It means that you should pay all your bills on time before the due date and also pay down the balance of your credit card. These two combined can reduce your DTI or debt-to-income ratio. As a result, it improves the chances for you to qualify for low mortgage rate that can save you a lot of money.
Additional Tips to Get Lower Rate
Increasing your home equity makes another excellent tip for lower mortgage rate. To increase it, you must do certain things like decorating your house or installing new appliances to increase the equity. In this case, you do have to pay to make your house a better place for living. But in the end, it will save you bigger money once you can get lower interest rate.
It is also necessary to organize financial documentation that you have. In this case, you must also get your own credit reports that are published by at least 3 different bureaus. It is necessary to make sure that there will be no mistake before you apply for the refinance home loan. The typical refinance loan applicants are required to have 2 years of tax returns, investment statements, two most recent bank statements and also 2 recent pay stubs.
Apparently, paying the closing costs with cash does you a great thing. It allows you to have lower rates because the closing cost is as much as 2% of the total loan amount. Well, it is not a small amount. Yet, it is big enough to make significant affects to your home loan refinance rates.