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By Marie-Claire Smith
A home loan, or mortgage, is an amazing thing if you think about it. After all, by taking out a home loan you are effectively buying something that you could never in your wildest dreams afford if you had to pay cash for it up front. Rather, immediately after coming up with a relatively small down payment for your home loan, you are able to get a hold of the keys and walk through the front door of a very expensive piece of property. It’s effectively yours!
But, then again, technically it is still the bank’s property until you pay it off in full, sometime in 20 or 30 years in most cases. Oh well, at least it is partly yours!
Regardless of whose home it really is at the moment, there comes a time in many homeowner’s lives when they believe it may be time to refinance their mortgages. But, how can you know whether now is the time to refinance, and how can you get the best interest rates on a refinance loan?
When Refinancing Home Loans Makes Sense?
There are a number of reasons why this may be the time to refinance your mortgage. Reasons why it make sense include if:
a. Your home is worth more than you owe on your home (i.e., you have equity in your home).
b. You believe that interest rates have come down since the time you took out your mortgage.
c. You face possible foreclosure or default on your existing mortgage.
d. Your payments have become hard to make each month.
e. You still occupy the home.
f. You plan to remain in the home for at least 2-3 years or more into the future.
Why Getting A Low Interest Rate Matters?
While refinancing for any of these reasons can be enough to justify going forward with it, the ability to get a low interest rate on your refinance should factor heavily into your decision.
The reason why getting a low interest rate is so important has to do with two important things: a. the amount you will pay for your monthly loan payments, and, b. the total cost of your loan.
In terms of the cost of your loan, for example: reducing the interest rate on a $250,000 loan by just 1% will save you over $50,000 in interest payments over the life of a 30-year mortgage.
5 Tips For Home Loans At Low Interest Rates For Refinancing
Here are 5 tips for helping you to get the lowest-possible rate on your refinance:
1. Start by researching your credit score: As with any type of financial loan, refinancing a mortgage will require that your lender checks your credit score. This is so that they can manage risk and is a normal part of the process. That said, it is a good idea to research your credit score ahead of time. Be sure to fix any glitches or errors in your report that might be affecting your score negatively.
2. Consider an FHA home if you have average or low income or a poor credit score: Federal Housing Administration (FHA) loans can be a smart move, depending upon your financial situation. If you are interested, just ask the lender if they are FHA-approved.
3. Apply to and get offers from at least 5-7 refinancing lenders: Research online and apply to at least 5-7 refinancing lenders. Remember, the more lenders you apply to, the better your chances of finding the lowest-possible interest rates.
4. Make sure you request apples-to-apples quotes: As you apply to the various lenders, make sure you are asking for identical loan terms. That way, you can safely compare the resulting quotes for the best deal.
5. Watch out for points: Some lenders will offer you a lower interest rate in exchange for charging you a fee – often called points – on your loan. This fee increases the cost of your loan, so be careful about paying points.
Compare all of the final offers you get carefully before selecting one. Look at the fine print of each offer. Then, make your choice! Follow these 5 tips to get the best-possible interest rate on your refinanced loan.
About the Author: Get more tips on low interest rates for refinancing at: Low Interest Home Refinancing Loans.
Source: isnare.com
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