Refinancing your mortgage

How Much Would My Refinance Rate Be?

When mortgage rates hit rock bottom, many homeowners think about refinancing. However, some might be surprised that those low mortgage rates won’t necessarily be their refinance rate. In fact, refinance rates could differ as much as 1% or more, based on many different factors, such the following:

Your Credit Score

In general, a lower score equals a higher mortgage refinance rate, as Altius Mortgage Group and other loan officers in Utah noted. For instance, a 695 credit score is considered decent, but those with a score of 695 could pay more than borrowers that have a credit score of 760 or higher.

Your Loan Amount

Small loans, those around $150,000 to $50,000, usually come with higher refinance rates since lenders won’t make that much money on them. Likewise, if you’re planning to borrow money higher than conforming loan limits, you would also get a higher refinance rate.

Your Loan Term

Generally speaking, loans with shorter repayment terms would come with lower refinance rates, and loans with longer terms would come with higher rates.

Your LTV

If you have a home loan with a loan to value (LTV) ratio higher than 80%, you would have to take out private mortgage insurance or PMI. You could pay your PMI upfront, over your loan term, or roll it over your mortgage payments, which would increase your refinance rate.

Your Refinance Type

If you’re looking for rate and term refinance, you would pay the same rate as those who are buying a house. If you want a cash-out refinance, your refinance rate would be higher if you have an LTV of 70% or higher.

Your Lock Length

The longer you take to lock-in your loan, the higher your refinance rate would be. Your rate could increase by 0.125% or 0.375% depending on how many days it takes to lock in your refinance rate.

Specific Type of Residence

If you’re refinancing a townhouse or single-family house, your refinance rate would be lower as opposed to if you were refinancing a condo unit.

Before you refinance, speak with your lender to get an estimate of how much your refinance rate would look like. Once you have an accurate estimate, you could then decide if refinancing really makes financial sense in your case.

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