How to Get the Best Rate for Your Home Refinance

Do you find yourself wishing you had a lower mortgage payment? Or are you looking to take advantage of the current market and lower your interest rate? If so, you may want to consider a home refinance.

Under the right circumstances, refinancing can be beneficial for many reasons. It can give you access to extra cash, lower your monthly payment, help you get a better interest rate, change your loan terms, or even help you get rid of PMI (Private Mortgage Insurance).

Below, we’ve shared some tips on how to get the best rate for your home refinance loan.

Is Now a Good Time to Refinance?

When it comes to getting the best rate for your home refinance, timing is key. Interest rates fluctuate based on a variety of factors, including economic indicators, central bank policies, and market conditions.

A general rule of thumb is that refinancing might be worth considering if you can get a rate that’s at least 0.5% to 1% lower than your current rate. This can lead to substantial savings over the life of your loan.

The good news is that experts are predicting that mortgage rates will steadily decline this year and next. Some have even stated that they expect to see rates drop by as much as 2% in 2025.

Tips for Getting the Best Refinance Rate

Beyond monitoring current market rates, there are other steps you can take to secure the best home refinance rate. You’ll want to make sure that your finances are in order and that you’re setting yourself up for success. Here are some tips that can help:

Improve your credit: Lenders offer the best rates to borrowers with good credit scores. Improve your credit score by paying your bills on time, reducing your debt, and correcting any inaccuracies on your credit report.
Lower your Debt-to-Income (DTI): A lower DTI ratio makes you less of a risk to the lender. You can lower your DTI by paying down debt or increasing your income. This might involve paying off high-interest credit cards, student loans, or other debts.
Build equity: The more equity you have in your home, the less risk you pose to lenders, which can lead to better rates. You can build equity by making home improvements that increase value or by paying down your mortgage principal faster.
Shop around and negotiate: Don’t settle for the first offer you get. Apply with multiple lenders to compare different rates and fees. Use the offers you receive as leverage to negotiate better terms.
Pay for points: Mortgage points, or discount points, are fees paid directly to the lender at closing in exchange for a reduced interest rate.
Maintain stable income: Lenders prefer borrowers with stable, predictable income. A solid work history can make your application more attractive to lenders and potentially help you secure a lower rate.