That’s why it’s important to consider your own personal situation and shop around in the quest for the best refinance loan.
That said, some borrowers do get better loans than others. So, here are a few tips on how you can be among those who get the best refinance loan:
- Clean up credit. Borrowers who have a high credit score are typically offered a lower interest rate and better terms on a refinance loan. That’s because good credit demonstrates to the lender that the borrower has a history of handling credit responsibly and repaying debts on time and as agreed.
- Make payments. A track record of on-time mortgage payments can boost a borrower’s credit score and help secure the best refinance rate and terms. If you have a good record of on-time payments, ask your current lender what’s the best deal you can get on a refinance. Find out what other lenders will offer as well.
- Be honest. If you’ve had some credit problems or been unemployed, or if you own another property or are a co-signer on another loan, disclose that information to your lender. This type of information will be found out, so holding back won’t help you get the best refinance loan.
- Document income. Borrowers who provide copies of recent paycheck stubs, W-2 forms and income tax returns may be offered the best refinance rate and terms. Borrowers who can’t document their income may have fewer options to get the best refinance loan.
- Lock your rate. If you’re offered a great rate on a refinance loan, discuss a rate lock with your lender. A rate lock is what the name implies: a way to lock in the rate so you can get the best refinance loan available to you.
Bankrate’s refinance calculator can help you figure out how much you could save by getting the best possible refinance deal.