- 4 min read
- Examine what determines your interest rate.
- Understand how to qualify for a low rate.
- Review why a low interest rate should not be your only consideration.
What Are Refinance Rates Today and How Do You Get the Best Rate?
Mortgage refinance rates are a hot topic. You can take advantage of today's low rates to lower your payments, consolidate high interest rate debt, or to cash-out on equity in your home.
Even if rates are low, you have to decide whether a mortgage refinance makes sense. If it does, then you should look for the best refinance mortgage rate for your situation.
How Rates are Determined
First and foremost, refinance mortgage rates are determined by the market forces of supply and demand. Rates are continuously fluctuating, so you need to stay informed by regularly checking the rate tables.
However, interest rates within any given time will vary, depending on each borrower’s individual situation. Lenders focus on the following factors, when determining your interest rate:
- Creditworthiness: Your credit history, focusing on your credit score and your recent history of timely payments.
- Finances: Your income, debt-to-income ratio, and the net worth of your assets.
- LTV: Your loan's principal balance compared to the value of your property.
- Loan type and loan structure: Whether your loan is a fixed-rate or adjustable rate loan, the length of the loan term (15 year compared to 30 year), and the payment structure (principal and interest or interest only).
Qualifying for Low Rates
How do you know if you might qualify for the lowest mortgage refinance rates available? Evaluate yourself, by answering these questions:
- Do you have a consistent history of paying all of your bills on time?
- Do you have enough monthly income to easily make your monthly payments?
- Do you have at least 10% equity in your home? Or, is the total balance of any existing loans on your property equal to less than 90% of your property value
- Do you have other assets, such as stocks, savings accounts, 401K balances, etc.?
If you answered Yes to all four questions, you are a good candidate to benefit from the lowest refinance mortgage rate available. If you answered No to one question, you should still speak with a mortgage professional. If you answered No to two or more questions, it will be more difficult to qualify for very low refinance rates.
If you can't qualify for the best rate today, take advantage of the other resources at Bills.com, so you have better picture of how you can improve your situation and eventually qualify for the lowest rates.
Finding the Best Rate for You
First, find the right loan type that is appropriate to your specific needs. Start by defining your goals so you find the loan that best matches your goals. Remember that a lower interest rate must be factored together with closing costs and the time horizon that you will hold on to the loan.
Everywhere you look online, in newspapers, on TV, billboards, or even hear on the radio, there are low rates being advertised. The key is to find the rates that YOU qualify for and that best meet your very specific needs. Looking at online rate tables and using certain calculators can be a great way to get started.
The Bills.com Refinance Calculator helps you to quickly decide whether a refinance makes sense for your specific situation.
If you prefer to talk to a few lenders and negotiate the best terms with a few, get a Bills.com Quick Quote and get matched with some of the best lenders in the country based on your unique situation and needs.
Bottom line, rates are at all-time lows. Now is a great time to take advantage of a low rate mortgage refinance. Do your homework and make sure you understand what market rates are. Then make a smart mortgage shopping decision using all of the tools that we make available to you. Good luck!