Lowering Your Interest Rate on a Mortgage

If you suspect that there has been a change in the interest rates for home loans, then it may be wise to look into benefitting from those new low interest rates. If you are interested in lowering the rate on your mortgage then there are ways to go about doing so. The first step that you can take with the least amount of hassle is to contact your current lender. They may actually be able to offer you a lower rate in order to retain your business and pay off loans.

Planning is Key

It is not beneficial to refinance your mortgage every time you spot a lower rate. Although it may be appealing to do so, there are fees involved in the process that make it not so cost effective to refinance several times. So, in order to take advantage of the best time to refinance you should keep an eye on the market to track rate changes. Then you will be able to target a time when rates seem to be at a low and move forward with the refinancing process.

If you want to be able to take advantage of those low rates when they are available then you need to make sure to always keep good credit. If you plan to refinance in the near future then it is a good idea to do some work to get your credit in order. Pay down your credit cards to be less than half of what credit is available to you. And, always pay all of your bills on time. These things will help to strengthen your credit and qualify you for the best rates.

If you are a relatively new homeowner than it may be unlikely that you have a significant investment into your home. But, if you wait until the equity of your home is built up to at least 20% then you will get a much better rate. So, if you are planning to refinance then it is a good idea to begin putting extra money each month toward the principle of your loan in order to increase your equity.

You should avoid refinancing to a mortgage that has a variable rate if you intend to stay in your home for a long time. With these mortgages the interest rates fluctuate with the market. So, although they are low right now, they could increase and put you in a tough spot financially in the future. With a fixed rate loan the payments for your mortgage will stay the same for the entire life of the loan.

And, if you decide to use a broker to adjust your mortgage then use caution on who you choose. You would not just trust anyone to handle your taxes, and you should show the same caution with who you trust with your mortgage. Make sure that they meet state requirements. And, be aware of what their fees include and if they get added commissions for recommending certain products.

Financial Hardship

If you are seeking to lower your rate because you are experiencing some financial hardships then you may want to consider modifying your mortgage rather than refinancing. If you are in a temporary hardship then a lender may be willing to work with you to get you back on track rather than go through a painful foreclosure. They may be willing to allow you to skip a payment or even may consider temporarily lowering your interest rate on a mortgage in order for you to catch up. This may be a better option for you to get back on track.

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