According to Mortgage Refinance, current mortgage rates for a 30- year fixed rate mortgage averages 4.04%, up from 3.97% from last week. The average for a 15- year fixed-rate mortgage current sits at about 3.25%, versus 3.21% the prior week. Even with recent upticks, mortgage interest rates remain near all-time lows. Americans contemplating refinancing a mortgage or purchasing a home can obtain loans at interest rates levels that are unlikely to drop much below current levels.
Multiple factors influence the mortgage rates consumers receive, such as the movement of bonds in the European financial markets or investors selling off treasuries to buy stocks. The interconnectedness of global financial market causes mortgage rates to vary more than ever.
Obtaining the best deal on mortgage rates require some due diligence on the part of the borrowers. Most people fail to receive the lowest interest rate and charges because they do not take the time to raise their credit scores as high as possible or adequately compare rates before choosing a loan.
Mortgage Refinance.com can make researching interest rate and costs easier by providing borrowers the ability to compare mortgage products. The following pointers can also help borrowers qualify for the lowest mortgage rates and fees available:
Learn Your Credit Score
Find out your credit or FICO score. The FICO score informs lenders of the level of your creditworthiness or risk. Generally, borrowers should strive for a credit score of 760 or higher to obtain the best mortgage interest rates available. The credit reporting agencies based credit scores on information contained in a borrower's credit profile.
For borrowers who have experienced problems that have affected their credit, get to work on resolving any issues and improving your credit report six months before applying for a home mortgage. This period gives borrowers the leeway needed to correct any errors or take positive steps to raise their credit scores. Borrowers can order their credit report from an agency, such as AnnualCreditReport.com. Agencies like Myfico.com charge a fee for access to consumer credit scores.
To correct errors on your credit report, follow the Federal Trade Commission guidelines for correcting credit profiles: 1) inform the credit-reporting agency of each inaccuracy or error in writing and 2) Directly dispute questionable items with creditors or the credit-reporting agency.
Reduce credit card balances and pay all your monthly debts on time to raise your credit score.
Prepare Paperwork for Mortgage Application
Start now collecting the documentation required when applying for a mortgage or refinancing a current loan. You can make sure you can move quickly to secure the best loan rate.
Generally, most lenders want the following paperwork:
- Federal tax return for the last two years
- Copies of pay stubs covering the last month
- Bank statements covering the last 90 days
Call around to find out what documentation lenders require applicant to submit with mortgage applications. If you plan to apply for an FHA insured mortgage, make sure that you understand the new rules concerning debt disputes of up to $1000 or more. FHA borrowers must now pay off the debt, or have solid documentation as to why their refusal to pay the debt has validity.
Evaluate Loan Fees
The lowest mortgage interest rate does not make always make the best choice when looking to finance a purchase or refinance an existing mortgage. Consumers must consider all charges that come with a loan transaction. Lenders add these costs to build in profit margins on loans.
Some of the most common charges lenders add to mortgage products include origination fees and points.
Origination fees, which some lenders call an applications fee, consist of the lender’s charges for processing the mortgage. The fee can amount to a flat charge or a percentage of the loan amount. In most cases, the origination charge equate to about 1% of the loan or one point.
Points refer to 1% of the loan amount for each “point.” Most lenders require payment of points after the loan approval or at the closing. For example, VA and FHA loans require buyers to pay points. Borrowers can negotiate points when seeking loans from mortgage lenders for private mortgage, or as an aspect of negotiating a home’s purchase price.
In some cases, lenders allow borrowers to finance points into the cost of the loan. This approach increases the interest cost on the mortgage. Borrowers can deduct the cost of points from their income taxes, but only for the year the borrower actually pay the points.
Finding the Best Mortgage Products
The standard mortgage loan product includes one point for the application fee plus an additional point— two points. However, some lenders add on other charges, especially if the borrower has tarnished credit. These lenders may charge credit-challenged borrowers a high interest rate and 2 to 5 points. Regardless of your credit score, always shop around to obtain the best interest rates and lowest charges.
Borrowers should search for the best mortgage product among a variety of lending sources loan, including credit unions, local banks, national banks and mortgage brokers. Mortgage comparison sites, such as Mortgage Refinance.com provide borrowers with the ability to obtain the best mortgage product by making multiple comparisons from among a broad range of mortgage lenders.
Make sure you understand the fees lenders charge. Federal laws require lenders to give borrowers an estimation of charges, or a “good faith estimate,” which documents and itemizes any closing costs associated with the loan. Always compare the annual percentage rate (APR) –points, closing costs and the basic mortgage rate paid on the loan, between the products before deciding or a mortgage.