Brampton Mortgage Broker – Rumy Gill

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Brampton Mortgage Broker - Rumy Gill

Mortgage in itself is a very complicated process. Understanding the entire procedure, conducting research and then getting a low-interest rate takes a lot of time. So if you would like to refinance your existing mortgage, we definitely understand how you would feel about going through another set of paperwork on rules and regulations and not to mention another round of research. We don’t want you to waste your valuable time that you can use on more serious matters. That’s why our team at Brampton Mortgage Broker has come up with this blog to help you with your mortgage refinance decisions. So, without further a due,  here are 10 tips that can help you refinance your mortgage for a better rate. If you have any questions about getting the best rate on your mortgage refinances then make sure to reach out to one of our team members at Brampton Mortgage Broker at the end.

  1. Earn equity from your home: Having a good amount of equity in your home can help you lower your refinance interest rates. This also means that you owe relatively little mortgage compared to the market price of your home. Generally, lenders like it very much if the owner has a minimum of 20% equity in their home. You can boost your home equity by investing in renovations; remodelling your kitchen or fixing the roof is a great way to increase the value of the property. Another way is to increase your monthly mortgage payments, the faster you pay off your mortgage, the faster you get the equity back.
  2. Optimize your credit score: Your credit history will always play a major role when it comes to mortgage refinancing. Lenders will want to check it to see if you have been making your payments on time and if you have a good credit score i.e. if it is above 700, you are one step closer to getting a low-interest rate for your home. That is why it is very important to keep your credit scores up-to-date and if you find errors in your credit report, rectify them quickly so you don’t face any issues when you opt for a refinance.
  3. Keep credit balances on the lower side: If you can keep your credit balances below 25% of your available credit, that can help you with the refinancing process. What happens here is, by keeping your credit balances on the lower side, your credit utilization ratio is low. If you’re don’t have that much knowledge on this matter, let’s simplify it. Let’s say that you own one credit card with a $10,000 spending limit and it has a $3,000 balance, on another credit card the limit is $8,000 and a $2,000 balance. Added together, you’re using $5,000 of the $18,000 available to you, or 27.78% making your credit utilization ratio is 27.78%. Lenders like to see a credit utilization ratio of 30% or less. Try paying down some of your credit debt to lower your ratio.
  4. Lower your debt-to-income ratio: You should know that lenders also look at your debt-to-income ratio when they are determining your interest rate. If your DTI ratio is around 36% or less than that you have the chance to get an affordable interest rate.
  5. Clear off your existing loans:  If you can pay off your existing loans or dues quickly, or find a way to lower your monthly debt repayments, then it can decrease your DTI ratio. For the latter option, you can speak with your lender if you can extend the loan pay-off period to decrease your monthly payments or if there are any other viable options.
  6. Don’t quit using consumer credit: Paying off consumer credit is great, however, you should continue making small purchases on your credit cards from time to time. Afterwards, when you pay off your debts in a timely manner, it shows you manage your debt responsibly and can help you improve your credit score.
  7. Apply for a shorter loan term: One of the best ways to improve your credit score and clear off your existing loans quickly is to apply for a shorter loan term. You might have to spend a bit more on your monthly repayments, but if you can afford it, opt for this plan and clear off your dues. This can help you negotiate your refinancing terms better.
  8. Compare mortgage refinance rates in the market: A Consumer Financial Protection Bureau (CFPB) survey recently discovered that nearly half of all homeowners request a mortgage quote from just one lender out of the many that they come across when they are searching for a property. Consumers who received rate quotes from multiple mortgage lenders cut their interest rate by as much as 50 basis points (0.50%) which results in over $14,000 in mortgage interest savings on a $300,000 loan over 10 years. Your present lender or local bank may not offer your best refinance option. If you compare rates and fees from three to five mortgage lenders, not only will you have more options, but you can choose the best one of them. A simpler way to get this done is by speaking with a member of our team at Brampton Mortgage Broker, who can help you find the best rate from our larger network of mortgage lenders including Banks.
  9. Negotiation: One of our experienced and licensed Mortgage Brokers can help start the paperwork on your mortgage refinance, and help you read through the fine print carefully before accepting the terms and conditions. Remember, you will have to pay off the loan, so it is better to have a clear idea of the policies and clauses of the contract. If you want to make some changes, let the Mortgage Broker know, you don’t want to miss the opportunity to get the terms you want, during the mortgage refinance process.
  10. Lock in the best rate: After conferring with a Mortgage Broker about an estimated time to closing, ask them about a mortgage rate lock. Putting this clause in the paperwork can prevent rising rates from affecting your mortgage while the loan is being processed- which can take weeks.

So, those were the 10 tips to help you make a well-informed decision when it comes to taking up a mortgage refinance. We hope it has helped you get better clarity on the topic. If you have any questions or want to get started on a mortgage refinance, make sure to contact a Mortgage Broker from our team at Brampton Mortgage Broker today!