Lower Your Mortgage Rate: Get the Facts

By Debbie Wilson
LoanPage.com Columnist

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In order to get the lowest possible refinance mortgage rate, you first need to know the facts behind the rate. There are several factors that affect the actual mortgage rate you're entitled to. These factors include the mortgage amount, your FICO score, your income, and your loan to property value.


Mortgage Amounts

The mortgage interest rate you receive on your refinanced loan can be directly related to your loan amount. On average, the larger the loan amount, the more money your lender or broker has to work with. In some cases, this might mean lower closing costs or mortgage rates. Keep in mind that jumbo loans (those usually more than $300,000), fall under an entirely different category and typically carry higher mortgage rates.

FICO Scores

Your FICO score can have an important affect on your mortgage rate since it provides mortgage lenders with financial information on your credit history and your credit risk as it relates to loan repayment. The lower your FICO score (below 620), the higher your interest rate will be. Conversely, if you have excellent credit, you might get special privileges, including an easier time getting a loan and a lower mortgage rate to boot.

Loan to Value

In order to get the best mortgage rate, you'll want to keep your loan to value (LTV) at 80% or less. LTVs greater than 80% typically require PMI insurance and also come with a higher interest rate. If you are refinancing and your LTV has fallen below 80%, you might qualify for a drastically reduced mortgage rate. Ask your lender.

Ultimately, your mortgage rate can be determined by a number of factors that are well within your control. By knowing the facts, you can help reduce your mortgage rate and save thousands of dollars over the life of your refinanced loan.


About the Author
Debbie Wilson owns and operates a lakeside resort. Her previous experience includes profitability consulting for a national healthcare company. Debbie holds a B.A. in Business Management with a minor in Physical Education.

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