6 ways to improve your odds of getting a low mortgage refinance rate

6 ways to improve your odds of getting a low mortgage refinance rate

February 1, 2021

With interest rates set at historical low levels through 2022, now may be an ideal time to consider refinancing your mortgage. Follow these tips to secure the lowest rate possible. (iStock)

Mortgage rates are hovering near record lows and the Federal Reserve has pledged to keep interest rates near zero until 2023, providing homeowners with ample time to lock in the best mortgage refi rates possible. Before speaking with banks or lenders, it’s wise to take the steps necessary to position yourself as an ideal candidate for the lowest mortgage refinancing rates.

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If you’re interested in refinancing your mortgage as soon as possible, you can find a low rate from the comfort of your own home. Visit Credible to get in touch with experienced loan officers who will answer all of your mortgage refinance questions within minutes.

6 ways to get the lowest rate when refinancing

Refinancing your mortgage may be simple, but getting the best mortgage refinance rates requires a little patience, effort, and strategy. Use these six steps as your checklist to organize your finances and secure a low mortgage refinance rate.

1. Make extra payments to increase your equity

No matter the size or structure of a mortgage, making consistent monthly payments on time is vital. However, some homeowners don’t realize that they can make additional payments each month to lower the principal. Any extra payments will lower the loan, but making additional mortgage payments on a bi-weekly schedule can substantially shorten the amount of interest paid on the loan during its lifespan.

As you pay off more of your mortgage, you’ll increase the equity in the home. When the time comes to refinance, homeowners who have at least 20% equity may be eligible to remove the private mortgage insurance on the loan, thus lowering the overall interest rate.

If your current mortgage rate is higher than today's averages, then you will want to consider refinancing. You can visit Credible to compare rates and lenders from the comfort of your home.

HOW TO GET THE BEST MORTGAGE REFINANCE RATES

2. Lower your other monthly bills

All homeowners should have a clear picture of their finances prior to refinancing their mortgages, which includes an estimation of average monthly expenses. Lowering your monthly bills helps in two ways: it allows you to increase your savings and it can lower your debt-to-income ratio.

If you have other outstanding loans, such as student loans, you can also refinance them to secure a lower monthly rate. Visit Credible to learn more about private student loans and get personalized rates from multiple lenders without affecting your credit score.

WHY IT'S A GOOD IDEA TO REFINANCE YOUR MORTGAGE WHILE RATES ARE LOW

3. Consolidate your debt

Because lenders will consider your debt-to-credit ratio when offering lower mortgage refinance rates, it’s helpful to pay down debt as soon as possible. One way to streamline this goal is by consolidating your debt.

For example, a personal loan may help with paying off high-interest credit card debt. You can explore personal loan options by visiting Credible to compare rates and lenders.

If you regularly rely on a credit card to make large transactions, another option that could help prevent your debt from growing is to open up a credit card with a 0% APR. When you visit an online marketplace like Credible, you can view multiple 0% credit card options at once.

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4. Research multiple lenders

With interest rates at dramatically low levels, borrowers will have no trouble finding low mortgage refi rates from virtually all lenders. However, these rates will vary slightly from lender to lender, so it’s best that you research multiple lenders to determine who can offer you the lowest rate possible.

Though you can speak with loan officers in person, you can expedite your search using a variety of online resources. Visit Credible to view loan options across multiple lenders with fewer forms to fill out.

HOW TO LAND THE BEST MORTGAGE AND REFINANCE RATES

5. Improve your credit score and monitor your credit report

Although the Federal Reserve sets interest rate levels, individual lenders will offer borrowers rates that include additional fees. The rate that they offer will be heavily influenced by your credit score. You can improve your credit score by not only paying off debt but also by removing any errors from your credit report. You should also regularly monitor your credit score and report to ensure its accuracy.

6. Increase your income

Money may not grow on trees, but increasing your income quickly isn’t an impossible task. Start by investigating opportunities for pay raises or overtime shifts at your current job. If you have a skill you can monetize in your free time, consider seeking out freelance work or side-jobs to generate additional income. The increase in opportunities for remote working offers unique ways to earn a supplemental income from home.

When it comes to securing the lowest mortgage refinance rates, taking the right steps to responsibly manage your finances can really pay off. Visit Credible today to receive prequalified rates without impacting your credit score.

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