Refinance rates for 30-year mortgages edged down a bit today. Those with good credit are in luck. Lower rates are only available to borrowers with good credit. Low loan-to-value ratios and reduced origination fees are also a benefit. In this article, we will discuss the benefits of refinancing. Let’s dive in. And if you’re interested in refinancing your mortgage, get ready to take advantage of lower rates and lower fees.
Interest rates for 30-year mortgages edged down today
Interest rates for 30-year mortgages edged lower today, but still remain high compared to a year ago. Today’s average rate for a 30-year fixed-rate mortgage is 5.81 percent, up from 4.78 percent last week. The rate for a 15-year fixed-rate mortgage was 4.92 percent and was down from 2.34 percent a year ago. For a five-year adjustable-rate mortgage, rates were unchanged at 4.29%, down from the previous week and 2.45% a year ago.
Rates for 30-year mortgages edged down today as well. The 30-year rate was down 0.31 percentage point to 4.99%. That marked the seventh consecutive day that rates for a 30-year mortgage fell. Despite the decrease, longer repayment terms are still above 5%, so homeowners who are looking to refinance should consider a shorter term. Cash-out refinancing offers a good opportunity for those who can afford the monthly payments.
Long-term U.S. mortgage rates have steadily increased for seven consecutive weeks. The 30-year mortgage rate, for example, rose by 1.5% in the past three months. Today, the average rate for a 30-year fixed-rate mortgage is at its highest level since April 2010, but it remains close to three-year lows. The 30-year rate was only 2.98% a year ago.
While 30-year mortgages tend to be more expensive than 15-year loans, they offer more flexibility when it comes to making payments and refinancing. Although the 30-year loan will require more interest than a shorter-term loan, the extra payments will be worth it over the years. A $300,000 30-year mortgage at 4% interest will cost $1,432 per month, and the total loan amount will be $215,608.
Lower rates are reserved for borrowers with high credit scores
Higher credit scores are reserved for borrowers who can demonstrate a proven track record of timely repayment. Lenders are always seeking to reduce their risks and prefer borrowers who have a proven history of responsible debt repayment. Therefore, they evaluate your creditworthiness by looking at your repayment history and other factors related to your borrowing history. People with excellent credit scores have fewer credit problems and are more likely to qualify for lower rates on their loans.
Although many borrowers have low credit scores, they can still qualify for lower rates by following certain tips. In addition to maintaining an excellent credit score, applicants should have fallbacks and reserves that can be used quickly in the event of a financial emergency. The availability of lower rates for low credit scores is not limited to the housing market, as mortgages are available to all borrowers. Moreover, the interest rates that are available for low credit scores are also not the same for high credit score borrowers.
Low loan-to-value ratios
Loan-to-value ratios of 90 percent or less indicate that the borrower has little to no equity in the asset. In order to build up equity, the borrower should make larger down payments, or buy assets with lower prices. Home equity loans require less equity. Here are tips for lowering your loan-to-value ratio. First, make your monthly payments on time. Make extra payments toward the principal, but beware of prepayment penalties.
If you’re considering getting a mortgage, try to find a lender with a low loan-to-value ratio. Lower loan-to-value ratios are beneficial because they mean that the lender is taking less risk. They are more likely to extend you the loan, which means lower interest rates. If you’re paying a high interest rate, however, the lender is taking a big risk that you won’t pay it back.
A high LTV is not as much of a problem as it once was. Many conventional loans, FHA loans, and USDA and VA loans can go as high as 97% LTV. Of course, the higher your LTV, the higher your interest rate. If saving for a larger down payment is not an option, consider asking a family member to help you out. That way, you may be able to get better loan terms.
If you are already underwater in your mortgage, there are ways to get an affordable refinance without going into a foreclosure. In most cases, the bank will accept your application and reduce the loan-to-value ratio. For instance, if your loan-to-value ratio is below 80%, you’ll pay less than what the home is worth. The lender will also lower the interest rate by making you put down $50,000.
Another option is to wait for a refinance. Depending on the value of your home, waiting can help you get the best mortgage rates and eligibility for the Home Affordable Refinancing Program. If your home value increases in the interim, this strategy could help you save money on the refinancing. If your loan-to-value ratio is lower than ninety percent, you may qualify for a replacement loan under the Home Affordable Refinancing Program. Likewise, Fannie Mae’s Community Seconds mortgage program can help you borrow up to 5% of your home’s value.
Reduced origination fees
Refinancing your mortgage at a lower interest rate could save you thousands of dollars over the life of your loan. However, this type of loan often comes with additional fees, which can quickly add up. A lender might refer to this as an underwriting or processing fee. They are both similar to origination fees. It is a good idea to compare several loan estimates before making a decision. Some mortgage experts advise avoiding no-fee refinancing.
One common way to save money on origination fees on a refi mortgage is to pay the lender upfront. If you are able to avoid paying this fee, you can save money at closing. By comparing several mortgage lenders, you can find the best deal available. For example, a lender that doesn’t charge origination fees will often offer lower interest rates. Typically, lenders will waive these fees if you are refinancing your mortgage at a lower rate than you currently are.
Another way to save money on origination fees is by negotiating with your lender. The lender can reduce these fees if you have good credit and a large down payment. This will indicate to the lender that you are a low risk for them. You can also ask your friends and family to chip in some of these costs, if you have the means. It would be worth the savings in the long run.