Best Refinance
Mortgage Rates
In today's oligopoly market structure, there is intense
competition between the lenders. This competition is proving beneficial to
the borrowers more than ever before. To top it, the borrowers are going
all out to refinance their loans due to falling interest rates. The
lenders in the quest to capture the market share are willing to go out of
way to suffice borrower's search for the best refinance mortgage rate.
Interest rates for all kinds of mortgage loans depend mainly
on two factors
- Market Indicators and
- Personal factors
of the borrower.
Thus when we talk about refinance mortgage rate for a
group of borrowers, effects of market indicators are going to be similar
for all of them. But a smart borrower keeps a watch on the market
indicators like stock market, Consumer Price Index (CPI), inflation, etc.
to be able to borrow at the right point of time. Still it is the personal
factors like current debts, credit history, equity in property, etc. that
determine what will be the best refinance mortgage rate for a particular
borrower. Thus a borrower can do a lot to lock in best refinance mortgage
rate.
Some of the things that a borrower can do are:
- Maintain credit history: Credit rating is a primary
determinant of borrower's ability to get best refinance mortgage rate.
Thus a borrower can maintain his credit rating and also improve it by
making timely payment against all the dues. Borrower should not buy more
credit cards and also should not surrender existing credit cards. Both the
cases can affect his credit rating.
- Strengthen bargaining position against the lender:
Having all the necessary documents like bank statements, credit card
statements, etc handy along with credit scores puts the borrower into a
better position to bargain with the lender.
- Restrict extensive use of credit cards or line of
credit loans: The borrower should not use credit cards or line of credit
loans to the maximum limit available. This either reduces the chances of
getting the required amount of loan or reduces the chances of getting best
refinance mortgage rate.
Some more points to take care of are:
- Not just
sticking to existing banker or lender: It is not necessary that one's
existing banker or lender would provide the best refinance mortgage rate.
It is always wise to consult more than a few lenders. This gives a scope
for comparing rates. Surfing through Internet would surely provide wider
options in short time and with little efforts.
- Use more paying points to get best refinance mortgage
rate: A paying point is equivalent to approximately 1 percent of the loan
amount. Paying points have to be paid upfront during the closing of the
deal. Higher the number of paying points borrower is ready to consider,
lower will be his rate of interest.
- Do not just compare refinance rate quotes: The rate
quoted is not always the final rate that goes into the loan agreement.
What is necessary to be compared is Annual Percentage Points (i.e. APR).
APR is the total cost of borrowing that includes all the additional
charges too.
