Refinance ToolBox Suggests 3 Easy Steps To Ensure You Get The Best Rate For Your Refinance Mortgage

April 26, 2012   Business News
(PRLEAP.COM) The Refinance Toolbox recommends a simple yet effective refinance rate search approach for homeowners considering a mortgage.

People seeking a new home loan usually want to get the best deal, however shopping for the lowest interest rate loan offer often becomes an overwhelming experience for the consumer. Utilizing a simple 3 Step research method will quickly isolate the best lender offer regarding refinance rates and alleviate a borrower's mortgage shopping stress.

The first step is to determine the homeowner's loan scenario and to relay this same exact scenario to each lender contacted for a rate quote. Two items will makeup an individual's loan scenario for rate quote purposes; Loan-to-value ratio and credit score. To calculate the loan-to-value ratio, divide the total anticipated loan amount by the value of the home being refinanced.

For example, refinancing an $80,000 loan amount on a home valued at $100,000 results in an 80% loan-to-value ratio. This figure, combined with the consumer's credit score is all that is needed to begin a refinance rates search. By using this same scenario, the individual will receive an "apples to apples" comparison for all lender quotes gathered.

Differences in mortgage rate offers among financial institutions can be quite substantial; therefore the second step involves contacting several lenders for rate quotes and good faith estimates. Refinance rate offers can vary for a number of reasons such as loan originator compensation, direct lending status, and even lender overhead. This is why it's important to gather refinance mortgage rates quotes from a variety of lenders and request a good faith estimate as well. The itemized estimate will include all of the items needed to evaluate for the true "bottom-line" best loan offer.

Finally, the third step involves examining all gathered good faith estimates, comparing interest rates and lender fees. To calculate lender fees for each estimate, find the heading marked as "Total Estimated Settlement Charges" and subtract from this number any entries for daily interest charges, initial deposit for escrow account, transfer taxes, and government recording charges. This calculation isolates total lender fees and should be used in conjunction with the quoted rate to easily compare against each estimate to identify the best deal.

Holding the best loan offer in hand, a borrower will have gained confidence in his or her lender choice while likely saving a significant sum of money over the term of the new refinance mortgage. For additional in-depth home refinance information on such topics as loan basics, credit basics, loan types, loan process, mortgage rates, and closing costs, please visit the RefinanceToolbox.com.
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Jim Bisnett
Refinance ToolBox
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