Like a lot of home owners, you’re probably considering refinancing your home at a lower rate to save a little money however getting a low rate may actually be more difficult then you would think.
Because of the number of foreclosures, short sales and changing regulations, lenders are cutting back on the number of products they offer. They have also upped their credit requirements. To get the very best rates you will need a credit score of at least 740 and 20% equity.
If you don’t have 20% equity you can still refinance. President Obama’s housing package allows homeowners who owe as much a 105% to receive government-backed loans. To qualify for that program your original mortgage must be held by Freddie Mac or Fannie Mae. You must also prove that you can make the payments and you’ll have additional fees that tack .25% to 3% onto your rate.
Get Rid Of Your Home-Equity Loans!
Having home-equity loans and lines have become the enemy of would-be financers. Before you can close on a new loan your home-equity lender must agree to be paid after the primary loan is paid which can take at least a month.
One way around this process is to do a consolidation refi through your home-equity lender. Or submit the paperwork to your Home Equity lender before you start shopping for a primary mortgage so that you don’t have to wait around when the right rate comes along.
Shop Around
Even if you have great credit you won’t get a great rate without doing some serious shopping. That’s because every bank uses different standards for underwriting loans. You will likely get the very best rates from small local banks and credit unions.
Pay A Point Upfront
A point equals 1% of your mortgage amount and will typically buy you an eighth to a quarter of a percent point drop in your rate. Some lenders will even knock off half a percentage point for those who pay a point. If you are planning to stay in your home for at least 5 years paying a point may be worth it.
We can recommend some great lenders- give us a call or email us!
bretteam@brettdavisrealtors.com; 207-846-0085
