How to Lock Low Refinance Rates

Learn how to get low mortgage refinance rates by shopping the right lenders. There is a difference and you'll learn what to look for to get the lowest rates possible.

Difficulty: Easy

Instructions

Things You'll Need:

• computer, internet connection

1. Search online for current estimated value of your home. This can be done for free at numerous online web sources with no requirement for email address or personal information.

2. Get a free credit score if you do not have a current credit report. This is a major determining factor for mortgage refinance rate qualification. A 720 mid fico score will qualify for the best rates. Lower scores may point borrower to check both FHA loans and conventional loans as rates become much more diverse and ranging for sub-720 credit scores.

3. Calculate your loan-to-value ratio. Divide the total loan amount that you wish to borrow by the value of your home. A calculation of 80 percent or less will reap the best offered refinance rates. A loan-to-value ratio over 90 percent may lead some to check FHA loans as rates for FHA refinances are sometimes much less than that of conventional loans, even for those with great credit scores.

4. Recap gathered statistics. For example, if you have a 760 credit score and a loan-to-value ratio under 80 percent, you are a prime borrower and should search for conventional loans primarily. A credit score of 600 with a loan-to-value ratio over 80 percent and your search should tend toward the best FHA refinance loan rates available.

5. Begin online search for refinance home loan rate comparisons. There is a major difference between lenders for your specific loan scenario. Lenders that are direct lenders and utilize software to pull current refinance rates from a number of national investors and banks will most likely result in the lowest rates available to you. Add lenders with "Upfront Lender" designation and you will be assured that your rate quotes are clear and valid, along with an open relay of all closing and settlement costs associated with your potential new mortgage.

Resources

• http://www.refinancetoolbox.com

[jim12065]

on 1/6/2009 Yes, FHA loans can be a great resource for those with less than perfect credit.

[jorgekb]

on 1/6/2009 Nice tips. Sounds like FHA is the way to go if you have a bad credit score.