Now is a Great Time to Refinance

Filed under: Market Comentary

refinanceEven though most Americans probably aren’t thinking about refinancing or buying a home during to the holidays, the next few weeks may in fact be a great time to do so.

According to Gibran Nicholas, chairman of CMPS Institute, an organization that trains and certifies mortgage bankers and brokers recently said, “There have only been two days in the last 18 months where mortgage rates have been as low as they are now. Mortgage rates are determined by mortgage bond prices in the bond market. There were only two trading days in the last 18 months where mortgage bond prices have been better than they are right now.”

However, if you aren’t quite ready to refinance, but you have been seriously thinking about it, there are some important things to know to make sure you can get the lowest mortgage refinance rate possible.

  • Raise your credit score

To be in the best “tier” for a conventional loan program, you should have a credit score of 740 or higher, but most lenders require a score between 620-640, although you will pay a higher rate with that score.

  • Lower your debt

Reducing your debt-to-income ratio will improve your chances of qualifying for a low mortgage rate. This means paying bills on time and paying down your credit card balance.

  • Organize your financial documents

Make sure to get your credit reports from all three credit bureaus and then analyze each one looking for any discrepancies that you may need to correct. You will usually need two years of tax returns with W2s, two recent pay stubs, and your two most recent bank and investment statements. It is an excellent idea to gather all of this information before doing a refinance application to make the process proceed more efficiently.

  • Save money for the closing costs

Usually, closing costs average about 2% of the loan amount. You can pay cash or, if possible, if you enough equity in your home, you can actually put these costs into your new loan.

If you have any questions about refinancing, please feel free to contact me as I can discuss everything in more detail.




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