Mortgage Refinancing Rate

The most important aspect of any mortgage refinancing is the interest rate that you get on the new mortgage.

The reason most people refinance is to get a better interest rate which can lower your mortgage payments in the future. Mortgage payments are composed of the interest rate and a small percentage of the principal of the mortgage. If the interest rate is lower, the mortgage payments will be smaller.

There are several reasons why the interest rate on a refinanced mortgage might be lower than that on the existing mortgage. The interest rate at the time of refinancing could be lower than at the time the mortgage was issued. The mortgage holder’s credit score may have improved which can get them a better interest rate. Or the mortgage holder might be able to get better terms on the mortgage which can also lower the interest rate.

Getting a Better Interest Rate

The time to refinance your mortgage is when you can get a better interest rate than what you’re paying now. The way to know that you’re getting a better interest rate is to monitor the interest rates being charged on mortgages on a regular basis.

Newspapers and business news websites post the current interest rates every day. Check these sources to see if your interest rate matches the going rate. If it doesn’t you should try and refinance your mortgage.

Remember just because a better mortgage interest rate is being offered doesn’t mean you can get refinancing. There are other factors that can affect your mortgage interest rate besides the market.

Other Things That Can Affect Your Interest Rate

There are many reasons why your interest rate can be higher than the average interest rate. If you had a low credit score or a history of bad credit when you got your mortgage that could have gotten you a high interest rate. If you had low income when you got your mortgage it might mean that you have a sub prime mortgage, which usually comes with a higher interest rate.

If your credit history or income has improved since you got your mortgage you might qualify for a better interest rate on refinancing. This means you should check your credit rating on a regular basis if it has gone up by quite a few points you should consider refinancing. You should also look into refinancing if your income has improved.

The reverse of this is also true if your credit history or income hasn’t improved or gotten worse it could disqualify you from getting refinancing. Only apply for refinancing if you have a credit score of around 600 or higher. You should check your credit score yourself before applying for refinancing.

This means that you should work to improve your credit score if you can. Paying off debts and removing false or inaccurate information from your credit record can raise your credit rating. You can also improve your credit rating by paying off a large percentage of your mortgage.