Qualifying for the lowest mortgage rate can save you thousands of dollars. If you are in the process of refinancing your mortgage, then read the following 5 tips on how to qualify for a lower interest rate.
Tip #1 Shop Around
When you shop around for the lowest packages, doing so will give you the best leverage for negotiating the lowest rates and fees for yourself. Compare the interest rates, points and loan fees. The ideal loan will have both a low interest rate and a low APR.
Tip #2 Loan Modifications
If you are looking to lower your rate, however you are not interested in changing the amount of years that are left on your mortgage, then a loan modification may be the best choice for you. Loan modifications are the quickest and cheapest way to refinance. This process usually costs less than $500. A loan modification is when a lender agrees to lower your interest rate for the remaining term of your loan. Make sure that your lender has not sold your loan into the secondary mortgage market.
Tip #3 Streamline Refinance
If your lender can not provide you with a loan modification, then you may want to try to get a streamline refi. The benefit of a streamline refi over a loan modification is that it’s a brand new loan and therefore, you are entitled to deduct more interest from the first few years of payments that you would on a loan modification.
Tip #4 Be On The Look Out For “Junk Fees”
Whenever you go to refinance, make sure to question any “junk fees” you may find. Junk fees include costs for services not received, such as a courier package or a loan review. These fees can add up and you don’t want to be duped so read the fine print.
Tip #5 Clean Up Your Credit
It may not be the fastest solution; however, when trying to negotiate for the lower interest and APR it’s always easier if you have either good credit or improved credit. There are various steps that you can take in order to improve your credit. For example, lenders like to see a history of timely payments, especially on your home and auto loans, as well as your insurance and utility bills.