Refinancing your home loan can be a great way to save money on interest and potentially lower your monthly mortgage payment. To get the best interest rate when refinancing your home loan, consider the following tips:
- Check your credit score: A good credit score is essential to getting the best interest rate. Make sure your credit score is in good shape before applying for a refinance. You can check your credit score for free at AnnualCreditReport.com.
- Shop around: Don’t settle for the first offer you receive. Shop around and compare interest rates from multiple lenders. Be sure to compare apples to apples by looking at the same loan term, points, and fees.
- Consider a shorter loan term: Shorter loan terms often come with lower interest rates. While your monthly payment may be higher, you’ll save money on interest over the life of the loan.
- Pay points: Paying points upfront can lower your interest rate. One point equals 1% of the loan amount, and each point typically lowers your interest rate by 0.25%.
- Have a stable income and employment history: Lenders want to see that you have a stable income and employment history before approving a refinance. This shows that you’re a low-risk borrower, and you’re more likely to get a lower interest rate.
- Consider working with a mortgage broker: Mortgage brokers have access to multiple lenders and can help you find the best interest rate. Be sure to ask about their fees before working with one.
By following these tips, you’ll be on your way to getting the best interest rate when refinancing your home loan.