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Mortgage shopping can be frustrating. Rates are constantly changing and refinance programs are always evolving. This can make it difficult to find up-to-date information. So why do people refinance their mortgage? Because there is the potential to save thousands of dollars a year!

Whether it’s taking money out of their equity or shortening the term length to save money in the long run, there are different reasons why people refinance. Interest rates are the driving force of the refinancing trend, so if you’re considering going this route, it’s important you know where current rates stand. Here are a few tips for when it comes to finding current refinancing rates:

  • Befriend the internet. With a variety of resources available online, many of which are free of charge, it’s possible to stay current and quickly get multiple quotes
  • Check out your local newspaper, as it may detail major fluctuations
  • Team up with a mortgage broker, as they can get in touch with you should rates drop or if you qualify for a new program

The Optimal Way to Lower Your Mortgage Rate

So how do you secure a low mortgage rate? By keeping up with the fluctuations in rates and being prepared to refinance when the time is right. Many homeowners refinance multiple times; just be mindful of closing costs.

As keeping an eye on changes in the market can be a lot of work, consider working with an experienced mortgage broker. This can make the process much easier, and you’ll have a go-to when it comes to asking questions.

Rate & Term Refinancing

Rate and term refinance is when you refinance simply to change the interest rate and the term of your mortgage. You aren't pulling out any cash or equity. Your new interest rate will be determined by how much money you are borrowing and for what length of time. Mortgage companies use a formula called a “loan-to-value” ratio to calculate this.

For example, if you had a $100,000 home and an existing mortgage of $50,000, your loan-to-value ratio would be 50 percent. The higher this ratio, the higher the interest rate.

"Buying Down the Rate"

You may be able to lower your monthly mortgage payments by "buying down the rate," especially if you come into some money. This mortgage term refers to the process in which you purchase “discount” points for a lower interest rate. As buy-down interest rates depend on the lender offering them, this is a situation where you’d want to make sure you have done your homework and have shopped around.

If you have the financial flexibility to invest in your home equity, this can be an extremely beneficial move.

Always Negotiate

When it comes to obtaining the lowest mortgage rate possible, there is always room for negotiation, from fees and interest rates to different programs you qualify for.

One tried-and-true way to get the lowest mortgage rate possible? Negotiate and let lenders compete for your business. By working with more than one broker, you can essentially pit them against each other. This, in turn, will give you more negotiating power.

Don’t Be Afraid to Lock in Your Rate

As rates fluctuate, it can be hard to pull the trigger when it comes to locking in a refinancing rate. Once you’ve done your research and have shopped around, you have to be ready to make a decision. If you don’t lock in a competitive offer, you risk losing it while you wait for something better to come along. Rates may start to rise in that time and you could end up paying more.

Cash-Out Refinance

When you refinance your mortgage for an amount that is higher than what you currently owe, this is known as a cash-out refinance. You basically withdraw the difference between these two mortgages in cash, which means extra money for you. Additionally, this kind of mortgage refinance option typically provides you with a different rate and term.

So, who is likely to take advantage of cash-out refinancing? Those who have home improvements on their mind or who may be considering debt consolidation. The extra funds that this option provides helps homeowners get to projects they may otherwise put off.

Refinancing Rates for Mobile Homes

Financing a mobile home is very different process from a traditional home, because mobile homes depreciate rather than appreciate. When it comes to refinancing a mobile home, you may have a hard time finding rates that are lower than the initial one. However, that doesn’t mean it’s impossible.

You’ll need good credit and stable income. As it’s important to explore all of the available options, you may want to consider selling your mobile home and putting your money into a traditional home that will offer a greater return on investment.

Changes in Interest Rates

It may seem that rates rise and fall all the time. Why? It’s because real estate is an investment, and when an investment is holding its value or even rising, people want to put more money into that investment, thus leading to lower interest rates.

Conversely, as home values decrease, interest rates will then be on the rise, as lenders don’t want to invest more money into a declining market. For these reasons, it’s important to choose a home wisely. You want to find one that will appreciate over time. The same goes for when it comes time to refinance. If you refinance wisely, you may even be able to protect yourself if home values drop!