How to Get a Lower Rate on an Existing Mortgage
When interest rates fall, homeowners can refinance their existing mortgage loans to take advantage of them. If they do this, their monthly payments will decrease. Homeowners who want to take advantage of these low rates, but have seen their homes fall too far in value to allow them to refinance their mortgage loan, still have an option: They can ask their mortgage lenders or banks to modify their existing loan by giving it a lower interest rate. Homeowners will have a better chance of success if they are struggling to pay their current mortgage.
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Things You'll Need
- Copy of your most recent mortgage statement
- Copies of your two most recent federal income tax returns
- Copies of your credit card statements
- Copies of your student, car and other loan statements
- Copies of your two most recent paychecks
Instructions
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1
Gather the financial documents you'll need to send to your mortgage lender to complete a refinance. These documents include your credit-card and other loan statements, your two most recent paychecks, your current mortgage statement and your two most recent federal income tax statements.
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2
Contact your mortgage lender by calling the number listed on your most recent mortgage statement. Tell your lender that you would like to refinance your loan to get a lower mortgage interest rate.
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3
Tell your lender if you are struggling to make your current mortgage payments, and a refinance to a lower interest rate will bring you financial relief. Tell the lender why you are struggling. If you've lost your job, mention this. If your annual income has dropped because of unpaid furlough days, mention this. And if you've suffered a serious injury or illness that has kept you from working, tell your lender. If you aren't struggling to make your payments, but simply want a lower interest rate, you can skip to Step 5.
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4
Write a hardship letter and fax or mail it to your lender. This letter will explain in writing the reasons why you need a reduction in your interest rate.
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5
Mail or fax your lender the paperwork described in Step 1. Your lender will look at these documents to determine if you qualify for a refinance.
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6
Give your lender permission to schedule an appraisal of your home. An appraiser will determine its current value. You'll need enough equity in your home--something that might be jeopardized if your home value has fallen--to support a refinance.
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7
Allow your lender to run a credit check on you. This will provide your lender with your credit score, a three-digit number that tells banks and lenders how financially responsible you've been in the past. If your score is 720 or higher, you'll qualify for the lowest interest rates.
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8
Agree to a date for the new interest rate if your lender agrees to modify your loan.
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