How to Get a Lower Interest Rate for Your Mortgage
If your budget is stretched to the breaking point, you’re not alone. Interest rates and home prices seem to rise constantly, leaving many homebuyers searching for ways to cut costs. To stretch your hard-earned funds, take steps to get a lower mortgage interest rate, which lowers your monthly payments and reduces your overall costs.
Be proactive about getting the best possible rate and terms for your mortgage — and choosing the right time to refinance if you already have a house payment. At GoPrime, we provide a variety of mortgage solutions that reduce the stress involved when getting a mortgage for the first time or modifying the terms of your existing mortgage. We do everything in our power to get a lower mortgage interest rate for you.
Should I Consider Refinancing?
Refinancing your mortgage means replacing the mortgage you have now with a new loan. Common reasons to consider refinancing include:
- Looking for a lower rate because interest rates are lower since you got your mortgage
- Moving from an adjustable to a fixed rate
- Getting cash back from the equity in your home to cover an emergency or to do renovations to increase the value of your home
- Seeking a lower interest rate now that you’ve improved your credit score
- Paying off your mortgage sooner than you would with the higher interest rate
Getting a lower mortgage interest rate starts by relying on an independent mortgage company like GoPrime to find one for you. To make it worthwhile, refinancing to lower your rate usually makes sense as long as you’re able to reduce the interest rate by at least .5% to 1% to because of the closing costs involved in a refinance and a restart of the amortization schedule of the new loan.
How Do I Prepare for a Refinance?
If you decide to refinance, prepare by making it likely that you’ll be approved for a competitive rate and terms. Try:
- Checking your credit report and credit score. Make sure the information on your credit report is accurate and you have a good credit score. Your score should be 730 or higher to qualify for the most competitive rates.
- Knowing the value of your home. Have a good idea of how much your home is worth and the amount of equity you have in the property. Your mortgage broker figures this out by looking at your property tax documents. A real estate agent performs comps in the area to show you how similar homes are valued.
- Considering closing costs. There are usually substantial closing costs involved in a refinance, just like when you received the initial mortgage. Make sure you’re prepared to pay for these.
When you apply to refinance your mortgage, you need most of the same documentation that you had when you first applied for a mortgage, such as tax returns, bank statements and proof of income.
Can I Get a Lower Mortgage Interest Rate without Refinancing?
If refinancing doesn’t seem like a good choice for you, you can still lower your mortgage interest rate or your monthly payment. Options include:
- Shopping around to find cheaper homeowners’ insurance
- Paying extra toward your principal balance whenever you can to reduce the total amount of interest you pay
Making a sizable principal reduction may lead to a lower loan-to-value ratio. This makes lenders view you as a less risky borrower, which helps you secure a lower mortgage interest rate.
How Do I Get a Lower Mortgage Rate?
Whether you’re a first-time homebuyer or a seasoned homeowner buying another property, you always improve your odds of getting a lower mortgage interest rate by following basic financing rules and healthy money management with steps such as:
- Maintaining the highest credit score possible
- Saving for a large down payment
- Relying on a mortgage company that protects your best interests
To find out more about the options available to you as a homebuyer, contact GoPrime Mortgage, Inc. at your earliest convenience. Check our references and you’ll find that we’re top in our field for finding homebuyers like you with exceptional service.