Ready to Refinance? Make Sure You Get the Best Interest Rate
The big news right now is that mortgage interest rates are at lows not seen for decades. For those who have been fiscally responsible, now is the time to reap the rewards. And they could be big. CNN Money offers a look at what someone who has an average home with an average could save — if he or she can refinance with the best mortgage interest rate:
Look – there is opportunity here. 30-year fixed mortgage rates are at 4.6%. Historically, that rate is 8%. And that is significant.
Let’s take a look. 30-year fixed mortgage rates are at 4.6%. If you took out a 30-year fixed loan of $170, 300 (the average cost of a home) at 5%, your monthly payments would be around $915. And at 8% you would pay $1,250. The savings? $335 dollars a month or $4,000 dollars a year.
Getting the best interest rate
Right now, the difficulty is in getting approved. Many banks are reluctant to lend money to those with poor to fair credit. Additionally, the best mortgage interest rate isn’t available to just anyone who wants to refinance. You have to meet the highest qualifications. Here is what is expected if you want the best interest rate on your mortgage refinance:
- Credit score of at least 720.
- 20% equity in your home.
- You can get an even lower rate if you refinance to a shorter term — 15 or 20 years instead of 30.
You can still refinance to a lower rate, even if you do not qualify for the best interest rate. If you have at least a 680 credit score, you can probably still get a reasonably good deal, depending on what your current interest rate is. If have less than 20% equity in your home and good credit, you might be able to take advantage of mortgage programs offered by the government — if your loan is serviced by Freddie Mac or Fannie Mae.
The rule of thumb is that it is worth it to refinance if you have at least a 1% difference in rates. Get your financial information together and do a little shopping around. You may find that you can refinance and save thousands on your home mortgage loan.
[...] if you don’t qualify for special programs, now could be a good time refinance. Mortgage interest rates are near historic lows, so it could mean big savings over the life of your loan. You can talk to your mortgage lender [...]
[...] is a good time to refinance. There are government programs designed to help people refinance, and mortgage interest rates are the lowest they’ve been in a looong time. With some mortgage interest rates at 4.65% [...]