Mortgage

One of the most important reasons why people choose to go for mortgage refinance is that they want to lower their monthly expenses. That is why people often look out for the ways to get a lower mortgage interest rate. However, please note that getting a lower rate in no way ensures a reduction in monthly payments. Therefore, have a clear idea of how refinancing can help you, before you go for it. Fortunately, regardless of everything, there are some proven ways that can help you get a lower rate. Let me give you an insight into the same.

Improve Your Credit Score
Your credit score plays the most important role in determining the rate of interest. You can maximize your chances of getting a lower rate by improving your credit score. In this connection, it is important for you to take care of the following things. Always remember that the information included in your credit report reveals your standing with your creditors.

• Make the monthly payments in time, as a missed or late payment will only result in a bad credit rating for you.
• Never stretch credit cards to their maximum limit because if you do so, it will adversely affect your credit score.
• Most importantly, do not forget to review your credit report before you apply for a mortgage refinance. The objective is to look out for inaccuracies, if any. Inaccurate information in the report may justify higher rates. Therefore, as soon as you find something wrong, immediately contact both the credit bureau as well as the creditor to get the error rectified.
• You can also improve your credit rating by closing inactive credit card accounts. You just have to send a letter in this regard to the company. However, do not forget to check your credit report one month after closing the account. It must also include a comment that the company has closed your accounts at “customer’s request”. The phrase “customer’s request” is very important otherwise other lenders while checking your credit report may assume that the company has done the closing, and not you.

Opt To Escrow Your Taxes And Insurance
You can also qualify for a lower mortgage refinance rate by choosing to escrow your taxes and insurance. When you authorize your bank to collect for insurance and taxes, it reduces the risk factor, and the bank is very much likely to offer you a better rate.

Pay Points
Paying points is another great way to qualify for a lower rate. However, this option is viable only for those who are planning to live in their home for many years. If that sounds like what you plan to do, you must go for it.

Go For A Short Term Loan
This is one of the easiest ways to get a lower rate. However, it is important for you to understand that shorter term may result in higher amount of monthly payments even though the rates are much lower. Therefore, this strategy is definitely not a good choice for those who are considering the option of refinancing as a way to reduce their monthly payments.

Put More Money Down
Another easy way is to put more money down. This way, the bank finds lesser risk and may easily be convinced to offer you a much lower rate. However again, if you are considering the option for mortgage refinance to reduce your financial burden, you may not like this idea. This idea is a better option for those who want to pay their loans quicker and save money that they may otherwise have to pay as interest.

Last, but not the least, do not forget to do some thorough comparison-shopping. Get at least three quotes from different lenders so that you could make an informed decision. Negotiation also plays an important role in getting a lower mortgage refinance rate. Do visit my website for more details on mortgage refinancing.