Home Mortgage Refinance Rates - Whenever the Fed drops the prime lending rate, there's a spike in home refinances, and it seems as though every TV or radio advertisement is trying to woo you with "rock bottom" home mortgage refinance rates.
More often than not, these advertised interest rates are available only to those with stellar credit, or who are willing - and able - to fork over the funds for three discount points. So, how do you find the best mortgage refinance rates?
Check your credit report before shopping for rates. The interest rate you'll receive depends on your credit score, so be proactive and check your credit report for errors before shopping for refinance rates. Visit annualcreditreport.com and request a free copy from each reporting agency (Experian, Equifax, and TransUnion). Scour these reports for accuracy; if you find errors, notify the credit bureau and send along documentation via certified mail.
Reduce outstanding debt. Tapping more than 50% of your available credit will have a negative impact on your FICO score. Pay down credit card balances to half the limit of each card.
Make on-time, in-full payments. Over 30% of your FICO score is based on timely payments. Before refinancing, make sure you pay all of your bills on time and in full for at least 6 months.
Always pay bills on time. More than a third of your credit score is based on whether or not you pay your bills on time. While investigating a refinance, be sure that you do not have any late payments on your credit report for at least 6 months.
Don't apply for new loans or credit cards. Every request for credit is logged as an inquiry on your credit report history, with each inquiry potentially lowering your FICO score by as much as 12 points.
After you've done your part to improve your credit score, shop around (via phone and web) to find the lender with the lowest home mortgage refinance rates and the most favorable terms. Be sure to contact your current lender to see if they will offer a discount or waiver of closing costs.