Compare Refinance Rates

To compare refinance rates, a loan applicant must first be aware of the lowest interest rate mortgages available to them by knowing their credit report scores from the three credit reporting agencies. By knowing one's own personal credit score, an accurate interest rate can be quoted over the telephone by various mortgage companies. Interest rates are directly determined by a credit score. Be advised that knowledge of all three credit scores from each credit reporting agency are required in order to receive rate information. Each mortgage company may scale their interest rate according to information from one credit reporting agency or a combination of all three.

Refinance or re-mortgage is defined as something financed or mortgaged again. In a sense, comparing refinancing quotes is virtually the same as comparing mortgage finance rates the first time. The only difference is that the loan applicant is looking for a rate lower than what they already have. Lenders update interest rates daily, so it is wise to check local newspapers and other financial literature for this updated information. Anyone who is determined to get up to the minute information can compare refinance rates by using the technology of the Internet. There are many finance and mortgage companies that offer loans via on-line.

A word of caution to those that refinance for a rate barely lower than their old one and that is to be aware of closing costs. Sometimes the closing costs of a new loan cost more than the money to be saved in interest charges over the life of the loan. To compare refinance rates effectively, a loan applicant will have to use a mortgage loan calculator. These types of calculators can be found online. They determine what a monthly payment will be, how much of that payment will be going to interest and what the total amount of interest paid over the life of the loan will be. Consumers should be aware of loan points, rate locks, and PMI or private mortgage insurance. The better informed one is, the better deal they can get on refinancing. "See then that ye walk circumspectly, not as fools, but as wise" (Ephesians 5:15).

Loan points are charged at a rate of 1% of the loan amount requested, and are either required by the lender, or optional used to lower the interest rate by .025%. For example: to compare refinance rates for a loan amount of $100,000 with a 5% interest rate with a 4.5% interest rate ;buying two points which costs $2000 brings the first interest rate to 4.5% and the second interest rate to 4.0%. Once the point and closing costs are factored in to the calculation, a real comparison can be made. It is also important to note that some lenders have loan programs that do not require a loan applicant to pay PMI. Usually a homeowner must pay PMI until the property has 20% equity. When refinancing and getting money out of the equity in the home, be sure that a surprise PMI payment is not required once the new loan takes effect.







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