13 Tips to Getting the Best Refinance Rates Possible

BY The Lenders Network

tips to get best refinance rates

5 minute read

When it comes to your mortgage as little as a fourth of a percentage point can mean a savings of tens of thousands of dollars over the life of a loan.

So getting the absolutely best refinance rate is very important!

Here are 13 tips that will help ensure you get the best rates when refinancing your mortgage.

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Average Refinance Rates

Average mortgage rates will change on a daily basis. If you have an interest rate higher than the current average mortgage rate. It may be time to refinance to a lower rate and start saving thousands of dollars on your mortgage today.

Average Mortgage Rates
Product Rate Change Last week
30 yr fixed mtg 3.76% – 0.01 3.77%
15 yr fixed mtg 2.98% – 0.02 3.00%
30 yr fixed jumbo mtg 4.28% – 0.44 4.72%
30 yr fixed mtg refi 3.74% – 0.02 3.76%
Last update: 05/29/2017

10 tips to getting the best refinance rates possible

Tip #1. Get a copy of your credit report and search for errors

According to a study by creditcards.com 1 in 5 American’s has a mistake on their credit report. Some people believe this number is even higher. Mistakes can lead to a lower credit score which in turn leads to refinance offers with higher rates. Make sure you contact the credit bureaus to dispute any mistakes on your report.

Tip #2. Pay off the balances on your credit cards

Your credit score is going to be one of the biggest factors in you getting the best refinance rate. One of the quickest ways to raise your credit score is by paying off the balances on your credit cards. The ratio of the balance compared to the credit limit on your credit cards is known as your credit utilization ratio.

Your utilization ratio accounts for 30% of your overall FICO score.  Paying the balances on your cards below 15% of the limit will have a significant positive impact on your credit score.

Tip #3. Have someone as you as an authorized user

Banks allow credit card owners to add an authorized user on their account. This person is authorized to have access to the account and use a card. The account will be reported to the authorized user’s credit report. FICO does consider authorized users in their credit scoring algorithm.

If you have a relative or a close friend with a credit card in good standing you should ask them to add you as a user. You don’t even need to physically have a card, and really you don’t want access to the account. You just want the account history on your report to help increase your credit score. This is a quick way to gain a few points on your score before applying for a refinance.

Tip #4. Dispute negative items on your credit report

The Credit Bureaus allow all consumers to dispute any item on their credit report they believe is inaccurate. If you have accounts in collections or other negative account information it is killing your credit score. You can dispute this type of information directly with each Credit Bureau.

The Bureau has 30 days to validate the information you are disputing or it must be removed by law. The entire credit repair industry is based on disputing negative items and hoping they don’t get verified are are deleted. Learn more about disputing information with the Credit Bureaus.


Tip #5. Explore your refinance options

Once you’ve maximized your credit score it’s time to start speaking to lenders and gathering information about your loan options. Are you refinancing from an FHA loan to a conventional loan to avoid PMI. Do you need a cash-out refinance or a home equity loan? There are many different types of refinance loans available and it’s good to know what you need first.

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Tip #6. See if you qualify for a Government refinance program

You may qualify for an FHA streamline refinance loan if you currently have an FHA loan. VA, 203k, and USDA all have streamline refinance programs as well. The Obama Administration created the Home Affordable Refinance Program, A.K.A. HARP to help people with conventional loans owned by Fannie Mae or Freddie Mae to refinance their mortgage even if they’re underwater on their mortgage. It’s important to know what type of refinance program you need.

Tip #7. Consider a 10-year, 15-year, or 20-year refinance term

By getting a loan with a term shorter than the traditional 30 years, you will get lower refinance rates. A 15 year refinance could have a rate as much as a full 1% lower than a 30 year refinance. Your monthly mortgage payment will be higher but a large percentage of that payment will be going to the principle balance. Paying off your mortgage quicker is always a great investment. Read more about the pros and cons of 30 vs 15 yr fixed rate loans.

Tip #8. Shop multiple lenders

shop refinance rates with lenders

This is one of the biggest mistakes homeowners make when it comes to refinancing their mortgage. Many borrowers call their existing loan servicer and choose to refinance with their current company thinking it will be easier and require less paperwork. The truth is, this could be the biggest mistake you’ll make.

You should get mortgage refinance rate quotes from at least 3-4 different lenders. Not only will this ensure you are getting the most competitive rate. You can use those offers and take them to your current mortgage company to match the rate.

Shop for the best rates

Tip #9. Don’t forget about closing costs

There’s more to consider when refinancing your mortgage besides the rate. Closing costs are always associated when you refinance. The lender should provide you with an LE, a loan estimate that clearly breaks down their fees and your rate. Closing costs, just like rates will vary depending on the lender. Make sure you also compare closing costs when shopping lenders.

Tip #10. You have 30 days to have your credit ran without affecting your score

Most people choose not to shop multiple lenders because they’re afraid all the credit inquires will lower their credit score. That couldn’t be farther from the truth. The fact is that FICO, the scoring model that calculates your credit scores actually want consumers to be able to shop around for the best rates.

Multiple inquires from the same type of lenders during a certain period is known as rate shopping. For mortgage rate shopping you have a 30 day window to have as many mortgage companies pull your credit report and it will only count as a single inquiry. It will not negatively affect your score as long as it’s done within a 30 day window. Take advantage! Speak to as many lenders as you can within your 30 day window.

Tip #11. Have all your documents ready

Refinancing your house will require lots of paperwork. You will need pay stubs, bank statements, tax returns, and more. Try to get all of these documents together before starting the process. This will cut down on delays and allow your loan officer to move more quickly.

Tip #12. Lock in your mortgage rate

When refinancing your mortgage loan timing is everything. Knowing when the rates are at their lowest and when to lock in that low rate is extremely important. Working with your loan officer and responding quickly to any document requests allow a lender to lock in the rate at the right time.

Tip #13. Work with an experienced loan officer

Believe it or not, having an experienced loan officer can help you get the best rate. An experienced loan officer knows when to lock in a rate, types of refinance options that may be best, and other tips and tricks to help you save a few bucks. An inexperienced loan officer could end up costing you in the end.

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