Refinancing mortgage lenders cater to different parts of the lending market. Therefore, some lenders specialize in prime loans, subprime loans, or both. Finance companies also differ in the way they structure their rates and fees. So with careful research, you can find the lowest cost loan for your refinance.
Go to the right lender for credit problems
If you have good credit with a score over 650, you’ll find the best financing with a prime loan. Most traditional financial companies, such as banks and credit unions, offer these loans at market rates. However, there are mortgage companies that also offer competitive financing.
With bad credit, you may still qualify to refinance with a subprime loan. Subprime loans have easier loan requirements, so you can apply even if you recently filed for bankruptcy or foreclosed. With some purchases, you can find rates as low as 1% above prime loan rates.
Matching terms with your financial goals
When refinancing, it’s important to match your loan terms with your financial goals to save the most money. For example, if you plan to move in two years, you don’t want to pay a lot of fees up front to secure a lower rate. You just won’t have enough time to save money. A better strategy is to keep closing costs to a minimum, even if it means paying higher rates.
On the other hand, if you plan to keep your mortgage refinanced, you’d be better off with a lower rate, even if you pay points. If you want to save money on interest, shorten the term of your loan to lower your overall interest payments.
Basing Decisions on Loan Quotes
Basing your loan choice on mortgage quotes ensures that you are choosing the right lender. Begin your search by choosing the best loan terms for you. Then request mortgage quotes based on those loan terms from multiple lenders. In a very short time, you will receive offers on rates, closing costs and APR.
Remember to look at how each of these numbers will affect your budget. The lowest interest rate is not always the best offer.
