The short answer is yes, you certainly can refinance to get a lower mortgage rate. When you purchase a home you most likely took out a mortgage to buy the home. If you choose to get a new mortgage to replace the first one, that is called refinancing. If your credit is in good shape, refinancing can allow you to lower your interest rate, saving you money over the life of your mortgage. You can also refinance from an adjustable rate to a fixed rate, giving you financial stability as well.
There will be closing costs associated with your refinance, just the same as when you got your original mortgage. It is important to review your refinancing options in depth to determine if you are truly saving money. If closing costs are steep and the interest rate improvement is minimal, it may not make sense to refinance just yet.
How to Get a Lower Rate
Your credit worthiness is just as important as it was when you first financed your home, so you want to be sure all your payments are being made on time, especially your mortgage payments. But that doesn’t mean your other smaller payments can fall by the wayside, those need to be paid on time as well.
Be sure to review your credit reports to make sure there are no errors on them. Credit report mistakes can easily be missed and can hurt your score.
If you’re able to get your credit utilization, that will help. You’ll want to keep as much of the limit available as possible on any credit cards you may have that are open. High credit card balances and other debts will have a negative impact on your debt-to-income ratio which is a factor when applying for any home loan.
A shorter-term loan can also be a way to get a lower mortgage rate. If you are going to pay off the loan over a shorter period of time, the payments are higher, so your lender may be more willing to lower the interest rate as they are getting paid sooner than later.
Reach Out Today!
Whether you want to refinance to improve your interest rate, or to obtain cash through a cash-out refinance, it is important to thoroughly review your options with your lender to ensure you are making the best financial decision. If you have questions about your options, please reach out to Family First Mortgage in Lafayette, LA.