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If you are looking to refinance your home mortgage, you will find refinance mortgage interest rates quoted in newspapers, online, in your junk mail, and probably even on your bank statements. These numbers are published in hopes of attracting homeowners into refinancing their mortgages.
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Refinance mortgage rates tend to be lower than first mortgage rates. The reason for this is to be competitive with the overall lending market and to encourage homeowners to borrow from the equity in their homes. The best refinance mortgage rates are available only to those borrowers with the best credit scores. And, as you would expect, the worse your credit scores, the worse interest rates you will be quoted by lenders. |
When your mortgage broker, or direct lender, looks at your credit worthiness they will be pulling your recent credit report from the major credit reporting agencies. This report contains information on your current account balances and payment history. Lenders will use the information on the report to decide whether or not to lend to you, and at what interest rate. This report changes from one month to the next depending on how your payments have been made.
If you will be shopping for a home mortgage refinance loan, you will want to avoid any negative marks on your credit. Some of the worst negative marks come from foreclosures, bankruptcies, charge-offs, and collection accounts. These must be avoided when at all possible in the months and years leading up to your possible refinance.
Refinance mortgage rates depend a lot on your credit scores; however they also depend on your income stability. If you are in the market for a home mortgage refinance loan you will want to have a steady job for at least the prior year. By having a source of steady income, you are showing your potential lender that you can pay the monthly payments on your home mortgage refinance loan.
By having steady income you reduce the risk to the lender that you will not repay the mortgage loan. By having gaps in your work history, or a lot of positions over a short period of time, the lender may see you as a risk for unemployment or late payments.
In addition to your income and your credit history, the third most important refinance mortgage rate criteria you need to be aware of is equity.
Your equity in your home is equal to the market value of your home minus your mortgage debt. This is the portion of your property which you own. For example, if your home is worth $400,000 and you have a $200,000 mortgage, then your equity is $200,000. The more equity you have and the more you have to loose, the more likely a lender will be willing to lend to you. By understanding how your credit history, income, equity pertain to refinance mortgage rates, you will be on your way to finding the loan which is best for you, and at the best refinance mortgage rate possible.
©2009 Best Refinance Mortgage Rates