Banking Industry Tips For Obtaining The Best Mortgage Rate When Refinancing

Posted on: 5 November 2018

If you obtained your home mortgage when your credit score was much lower, and the resulting interest rate was less than ideal, then now is a great time to refinance it and get a lower rate. In addition to lowering your interest rate, you may also be able to take out some of your built-up home equity to complete home improvement projects or pay off higher interest debts. 

To obtain the lowest rate possible, follow these banking industry tips.

Tip: Understand That a No-Cost Loan Rarely Is

If you see loans offered as "no-cost" and are tempted to apply to avoid paying lending fees, then you should understand that this type of loan may not have any upfront fees but often compensates in other ways. For example, a higher interest rate over the life of the loan or add-on fees that appear when you sit down at the closing table. When it comes to mortgage loans, it's important to remember there is no free ride. 

Tip: Don't Make Any Major Purchases Between Now and Your Closing Date

Now that your credit rating is favorable, it is vital you don't make any large purchases between now and the date your refinance loan closes. Even if your car dies or you find a smoking deal on the new kitchen appliances you want, avoid risking a drop in your credit score and hold off spending until your loan closes.

Tip: Use Professional Forecasts and Your Intuition to Lock in Your Mortgage Rate

When you apply for a refinancing loan, you will have the option to lock in your interest rate on a specific date. Locking in protects the rate you will pay from increasing in case interest rates climb between the day you apply and your closing date. 

While you have no way to know for absolute certain if interest rates will rise or fall, you will need to rely on your intuition a bit for choosing a date. In addition, you should read the future forecasts online for home mortgage rates and educate yourself about what the professionals believe will happen. Armed with this education, choose a day you feel will be the best.

Tip: Work With a Morgage Broker to Find the Best Refinance Mortgage Rate

In conclusion, it's important to mention the banking professionals known as mortgage brokers. Unlike bank or financial institution employees, mortgage brokers work with a variety of different lenders and are the best person to get you the absolute lowest interest rate for your refinanced mortgage loan. And, since they receive their income from the lenders in the form of commission, using a mortgage broker won't cost you any extra money.

For more information on obtaining low mortgage rates, contact your local financing office today.