Refinancing your mortgage could be the best decision you’ll ever make. But in order for the refinance to be beneficial, a lot of homework needs to be done to secure the best refinance rate possible. Let’s first discuss some of the reasons you may want to refinance your mortgage, then show you where to go, in order to lock in the best mortgage rates available.
Steps To Refinance Your Mortgage
Before discussing a refinance with your lender, or even looking into mortgage rates, you need to consider whether or not a refinance is the right choice. A refinance effectively takes whatever you currently owe on a mortgage and morphs it into new terms with a new rate and payment amount. In the long run, a mortgage refinance will generally always cost more, but in the short term, it can free up money for savings, emergencies or perhaps a little bit of fun.
Step #1 – Determine If You Need to Refinance – If you’ve been making your mortgage payments for years and are looking to pay less each month, a refinance is a viable option. However, if you continue to make your mortgage payments comfortably, with plenty of income left over, a refinance can be a very bad idea. Not only will it bind you into a longer mortgage term than you have right now, you lose a lot of money in extended interest payments. A mortgage refinance is primarily for consumers who will benefit from having lower monthly payments, so retirement or emergency savings can be added to.
Step #2 – Improve your Credit as Quickly as Possible – Once the decision is made to refinance your mortgage it’s crucial to do so with the best credit score possible. The interest rate you receive is dependent on a couple of factors, most notably how good your credit is. Improving your credit in a short time span is difficult but every point counts. Consider making large payments on credit cards, especially if you’re close to your credit limit because near limit credit cards can hurt your credit score. Also make sure to avoid applying for any kind of new credit other than the refinance, as a high amount of inquiries also lowers a credit score.
Step #3 – Find the Right Lender to Refinance Your Mortgage – A mortgage refinance is a super duper important decision, certainly one that should be made quickly. Your first move should be to check with your current lender to see what they can do in terms of a new rate and terms. Often times, a discount is provided to repeat customers. However your search, no matter how good the rate may initially look, should not end there. Make a stop at other banks in your area to see if they can beat your current lenders rate. Remember to also check online, as some online institutions can offer the best mortgage rates.
Finding the Best Refinance Mortgage Rates
With hundreds of different websites and companies offering to process your mortgage refinance, finding the right one can be tricky. I’ve listed three sites below that everyone should always check before refinancing, as these lenders always seem to be on top in terms of consumer satisfaction.
CapWest Mortgage – Earlier this month, we decided to take a look at CapWest Mortgage and found them to be a very solid mortgage lender. CapWest is a subsidy of Farmers Bank and Trust and looking at their current mortgage rates, it’s easy to see why they’ve been around more than 100 years. Whether your looking for a 30-year, 15-year, ARM or any other type of mortgage, be sure to check out the rates CapWest are offering.
Quicken Loans – Rated number one by JD Power and Associates for “Highest in Customer Satisfaction for Primary Mortgage Origination,” Quicken Loans may fool you with a software type name but this lender has always been one of the brightest and best. Currently Quicken Loans is the #1 online mortgage lender and #5 retail mortgage lender in the country and considering they’ve been in this business more than 25 years, Quicken Loans is a perfect place to start your search for the best refinance mortgage rates.
Wells Fargo – Wells Fargo is well known for a lot of things, including offering competitive mortgage rates in many variations. A few years ago, Wells Fargo made headlines by swooping in and buying Wachovia Bank, even though Citi was in talks to do just that. That merger seems to have worked out for everyone as Wells Fargo has soared in the last 24 months. Every month, we update our post on Wells Fargo mortgage rates to keep consumers aware of just how low these guys are willing to finance your mortgage.
Published or updated March 5, 2013.