In today's oligopoly market structure, there is intense
competition between the lenders. This competition is proving
beneficial to the borrowers more than ever before. To top it, the
borrowers are going all out to refinance their loans due to falling
interest rates. The lenders in the quest to capture the market share
are willing to go out of way to suffice borrower's search for the
best refinance mortgage rate.
Interest rates for all kinds of mortgage loans
depend mainly on two factors - Market Indicators and -
Personal factors of the borrower.
Thus when we talk about refinance mortgage rate
for a group of borrowers, effects of market indicators are going to
be similar for all of them. But a smart borrower keeps a watch on
the market indicators like stock market, Consumer Price Index (CPI),
inflation, etc. to be able to borrow at the right point of time.
Still it is the personal factors like current debts, credit history,
equity in property, etc. that determine what will be the best
refinance mortgage rate for a particular borrower. Thus a borrower
can do a lot to lock in best refinance mortgage rate.
Some of the things that a borrower can do
- Maintain credit history: Credit rating is a
primary determinant of borrower's ability to get best refinance
mortgage rate. Thus a borrower can maintain his credit rating and
also improve it by making timely payment against all the dues.
Borrower should not buy more credit cards and also should not
surrender existing credit cards. Both the cases can affect his
- Strengthen bargaining position against the
lender: Having all the necessary documents like bank statements,
credit card statements, etc handy along with credit scores puts the
borrower into a better position to bargain with the
- Restrict extensive use of credit cards or line
of credit loans: The borrower should not use credit cards or line of
credit loans to the maximum limit available. This either reduces the
chances of getting the required amount of loan or reduces the
chances of getting best refinance mortgage rate.
Some more points to take care of are: - Not
just sticking to existing banker or lender: It is not necessary that
one's existing banker or lender would provide the best refinance
mortgage rate. It is always wise to consult more than a few lenders.
This gives a scope for comparing rates. Surfing through Internet
would surely provide wider options in short time and with little
- Use more paying points to get best refinance
mortgage rate: A paying point is equivalent to approximately 1
percent of the loan amount. Paying points have to be paid upfront
during the closing of the deal. Higher the number of paying points
borrower is ready to consider, lower will be his rate of
- Do not just compare refinance rate quotes: The
rate quoted is not always the final rate that goes into the loan
agreement. What is necessary to be compared is Annual Percentage
Points (i.e. APR). APR is the total cost of borrowing that includes
all the additional charges too.