Couple considers refinancing with rates low
right path. You’re actually out there talking to various lenders and trying to understand the best deal you can get today.
Let’s start with your current mortgage. You owe about $230,000 on the loan, and your house is worth about $570,000. That’s well above the 20% equity lenders require for a conventional loan in order to sidestep private mortgage insurance and well below the limits to make the loan a jumbo loan. Jumbo loans have different rates and costs and frequently those rates and costs are higher.
The interest rate you’re being offered reflects the relatively low risk that you and your husband present to the lender, but it could be that there are other issues in your credit report that are causing some concern.
You didn’t mention what your credit score is, but say it was under 760; you might not get the very lowest interest rate but something slightly higher.
It’s also possible that your lender isn’t looking for loans like yours right now. If you live in a townhouse or condo, some mortgage lenders don’t want those loans on their books, so they will try to discourage you by offering a slightly higher interest rate. It’s also possible that this lender is not giving you the best rate that might be out there at this time, simply because that’s the way this lender does business — and that’s a reason to look elsewhere.
While it’s a lot more work, it’s important that you talk to four or five different kinds of lenders who can each give you their best loan program and fees. We assume you are looking for another 15-year loan, or perhaps even a 10-year loan, and those interest rates should be below what you’ve been quoted. Mortgage interest rates change frequently during the day. The mortgage rate you get depends on a variety of factors, but understanding what makes a “home run refinance” might help you sort through your options.
We believe that if you can lower your interest rate, lower your payment, shorten your loan term and keep your closing costs manageable, that’s a home run refinance. But, even if you only get two or three of these, refinancing might be worthwhile. You have to weigh the pros and cons.
Start by talking with a few more lenders — perhaps a local credit union, regional bank, mortgage broker and online lender — to understand why you’re not being offered the best rate and terms. Then, you can try to negotiate with your lender of choice. It’s really the only way we know to get the best deal.
Unfortunately, a new book isn’t in the offing for this year; but thank you for your feedback and encouragement. Best of luck with your refinance.