Best Refinance Mortgage Rates - If you're looking to refinance your current home mortgage, here are a few steps that will help you get the best rates available:
Shop around. Refinancing your home is a major financial decision that warrants at least as much time and attention - if not more - as purchasing a new car or making vacation plan arrangements. To shop around for interest rates, you can contact lending institutions directly, get quotes online, and/or work with a professional mortgage broker.
Correct errors on your credit report. There's a strong correlation between your credit score and the interest rate for which you'll qualify, so it's a great idea to do some research and make sure the information found in your credit report is correct. To begin, visit annualcreditreport.com and request a free copy of your credit report from each of the three major agencies (Experian, Equifax, and TransUnion). Check each report for accuracy; if you find mistakes, write a letter to the credit bureau and ask them to investigate. Be sure to enclose proof of the mistake and send all correspondence via certified mail.
Always pay bills on time. More than a third of your credit score is based on whether or not you pay your bills in a timely manner. To maximize your chances of approval for a refinance, it's ideal that you not have any late payments on your credit report for at least the past six months.
Reduce your credit card debt. As with timely payments, one-third of your credit score is based on the amount of available credit you've used. Having a debt-to-available credit ratio of over 50% will negatively impact your credit score. If possible, reduce your balance to less than half the credit limit on each card. For example, owing $7,000 on a card with a $10,000 credit limit puts you at a 70% debt to available credit ratio. Reducing the balance to $5,000 will have an immediate positive effect on your credit score.
Don't be tempted to apply for new loans or credit cards. Regardless of whatever carrot is dangled, resist the temptation to open new sources of credit. Every time you apply for a credit card or loan, the potential lender checks your credit report and an inquiry is logged on your credit report history. Each inquiry has the potential to lower your credit score by as much as 12 points.
The difference between an acceptable interest rate and an outstanding one can translate into a savings of thousands - or even tens of thousands - of dollars throughout the course of your loan. Do your homework to find the lowest and best refinance mortgage rate possible, and be diligent about maintaining a good credit history.