Since Britain’s vote last month to exit the European Union rattled financial markets, average long-term mortgage rates have dipped tantalizingly close to an all-time low of 3.31 percent set in November 2012. That’s prompting a flurry of purchases and refinances as borrowers rush to take advantage.
The current average rate amounts to a savings of about $76 a month on a $200,000, 30-year, fixed-rate mortgage from a 4.09 percent loan two years ago. That may not sound like much, but over the life of the loan, that’s $27,360 saved and about $27,379 in interest not paid to the lender.
Here are some things to consider when reviewing your refinance options:
Credit Score: To get the lowest interest rate, borrowers should have a clean credit report and a FICO credit score of 740 or higher. Scores below 680 will make it harder to qualify for lower rates. Consumers are entitled to a free credit report every 12 months from each of the credit bureaus: Experian, TransUnion and Equifax. Click here to request your credit report today.
Estimated Savings: Calculate your monthly savings and how much you’d save over the life of the loan if you refinance using the online tool from Bankrate.
Shop Around: Get quotes from several companies and track the offers, including an estimate for closing costs and any extra fees, like loan points paid to lower the interest rate. Lenders may charge fees for the mortgage broker’s services, credit reports, a home appraisal and title insurance.
Home Equity: Even borrowers who are underwater on their mortgage, or owe more than the home is worth, or those who have very little equity, may be able to refinance.
Type of Property: Own a vacation or second home? These types of properties are eligible for refinancing, but they’re generally going to carry higher interest rates than owner-occupied homes.
Contact me today to learn more about opportunities that may exist for you.
by Kristin Hawkins