How to Compare Home Refinance Mortgage Rates

A lower interest rate is one of the main reasons homeowners refinance their homes. Lower interest rates equate to lower monthly payments. We all want the best interest rate possible and want to know exactly what we are getting. It pays to do your homework before you ever contact a lender, fill out a loan application or authorize any credit checks. The right knowledge will save you time, money and frustration.

• 1

  Get your credit score free online at the FICO website. Once you have your current credit score, go to the Financial Help Center on the FICO website. You will find a chart listing credit scores and the current associated mortgage rates you can expect to be offered for a 30-year fixed mortgage and a 15-year home equity loan. Enter the amount you expect to borrow and click on recalculate to see a chart with credit score ranges, corresponding interest rates and estimated monthly mortgage payments.

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  Compare the interest rate you can expect with the information provided by FICO with the interest rate you would like to have and the credit score you will need to get a lower rate. A low credit score may disqualify you from refinancing or result in higher interest rates that will cost you thousands of dollars over the term of the loan. According to FICO, a difference of 100 points on your FICO score will cost you $40,000 in interest on a 30-year fixed mortgage. Work to improve your credit score to qualify for the best rates.

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  Compare mortgage rates for the same types of loans with several companies. The interest rates will be different for different types of loans. Compare the interest rates you receive from lenders with the interest rate information you obtained from the FICO website. Eliminate lenders from your list that do not offer you rates within the FICO guidelines. Choose between the remaining lenders by comparing other important aspects of the refinancing process such as fees, points and the total cost to refinance.