How to Lower Your Mortgage Interest Rate
- 1). Keep track of market conditions and mortgage interest rate fluctuations. The key to lowering your rate is knowing when to refinance so that you get the best rate. Because there are fees and costs associated with refinance, it is not advantageous to refinance over and over again. Choose the right time to refinance for maximum savings.
- 2). Maintain good credit. A few minor late payments aren't generally a big deal, especially if they are more than a year old. In the year before you plan to refinance, try to pay down your credit cards and other debt to half of the available credit limit, and don't let any payments fall 30 days behind. Staying current on your mortgage is particularly important.
- 3). Refinance after you have at least 20% equity in your home. You will receive a far better rate this way. If you bought your home with no money down and don't have 20% equity yet, consider putting some of your savings toward your principal balance to achieve 20% equity prior to your refinance.
- 4). When you're ready to refinance, the easiest way to compare home mortgage interest rates is to complete a quote form online. This will allow you to comparison shop for the best rate, points, fees, and other terms. If you prefer, you can use the services of a mortgage broker to comparison shop for you. Make sure there is no prepayment penalty on your loan, and if there is, delay your refinance or choose a lender with terms that will save you money even after factoring in any prepayment penalty.
- 5). Use an online mortgage calculator to compare mortgage rates and terms. This will help you decide whether a particular mortgage loan product will really save you money.
- 6). If you are in financial distress and can't obtain a mortgage loan refinance, consider mortgage modification. Banks would rather modify a loan to allow a struggling homeowner to get back on track with payments instead of pursuing a lengthy and costly foreclosure. Read "How to Save Your Home from Foreclosure with Mortgage Modification" for detailed information and steps on how to obtain a mortgage modification. Click on the link in the "Resources" section below. Mortgage modification can provide immediate relief for homeowners with high interest rate subprime mortgages.
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