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It may seem like a good idea to consider applying for a refinance home mortgage rate loan that is lower than your current mortgage rate. However, making a decision to refinance your mortgage based exclusively on lower refinance home mortgage rate does not guarantee you savings in the long run.


Here are 10 foolproof refinance home mortgage rate tips and what important aspects to take into account when making this important financial decision.


1. Know your current credit score to optimize your chances of getting the lowest possible refinance mortgage rate or even no closing costs under certain conditions. If your existing credit score is under 620, chances are you will not be able to get a significant rate reduction to make heavy refinance closing costs worthy in the long run.


2. Consider how long you are planning on staying in your current home since it will help you decide whether you should refinance in the first place. Check out free online mortgage refinance calculators to calculate a minimum number of years you should stay in your home to offset refinance closing costs against reduced rate savings and make it a financially worthy decision for your family. If you are not planning on staying in your house for more than 15 years, you are very unlikely to gain any financial savings over such short period of time.


3. Allocate some time to fully inform your mortgage expert of your desired mortgage goals. This may seem like a daunting task, but it will probably be the most productive way to achieve your goals.


4. Understanding all inclusive loan closing costs is an important part of getting your refinance home mortgage rate reduction. Mortgage lenders incur a wide variety of fees like loan origination, processing, credit check, inspection and many more that you will be responsible for paying in the end at the closing.


5. Avoid hidden fees that could be masterfully camouflaged into fine print and may not appear obvious at first. Even loan deals that might sound great at first, might come at generally higher rates that in fact wrap all the average closing costs that lenders incur.


6. A lower refinance home mortgage rate does not guarantee you bottom line savings since a lot of factors are influencing your refinance loan calculations including loan term and loan balance. Always compare annual loan interest cost of your old loan with your new one to figure out if in fact you will be getting much desired savings.


7. Paying points or prepaid interest may be a great way to get a lower refinance home mortgage rate in the long run if you are planning on staying in your home for a while. Don’t settle for 0 point loans thinking that they provide the most savings. In fact, buy down point provide some of the most overall savings to your bottom line.


8. In the pre-crisis economy the general rule of thumb for refinancing was to get at least a 1% rate reduction to make substantial closing costs worthy of your monthly savings in the long run. Nowadays, it might not always be true and one should look at each individual case separately.


9. If possible, try to put down at least 20% down when purchasing or refinancing. This will get your loan below the 80% threshold and provide you with the lowest rates and terms and with least penalties.


10. Jumbo mortgages necessary to purchase higher priced housing generally tend to run higher compared to regular home loans. The best way to avoid paying excessively high jumbo mortgage rates is to take out two loans that will place your refinance home mortgage rate below the jumbo loan limits, and save you thousands of dollars over a period of time.

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