There are several ways to lower your rate on mortgage and they depend on several variables, such as the amount of money one can put into refinancing a existing mortgage or, the interest rate charged by the Federal Reserve. Most companies, by pegging their rates with the Federal Reserve rate, offer different rates at different times of the year. Three essential things one will need for reducing interest rates are bank statements, tax records and pay stubs. Some ways to lower the interest rate on mortgage are listed below.
- The amount of money that can be put in refinancing the mortgage is important. If a substantial amount is put, which is over 10% of the loan, a lower mortgage rate is almost certain. When more money is paid in relation to the value of the home, the loan companies feel secure which helps in reducing the interest rate substantially. One should check finances thoroughly before deciding on the amount of money to be spent on the refinancing, as that is the key to lower interest rates.
- Any unfinished or unused room in the house should be completed and the house should be given a complete look. A big closet and flooring to an attic can turn it into a bedroom; likewise every part of the house should be utilized and made to look useful to the lender. This usually increases the value of the home in appraisals. And then, if the appraised value is more, the amount to refinance will be lesser in relation to that value, thereby decreasing the risk and also the interest rate on mortgage permanently.
- Contacting a loan officer at your present mortgage company and explaining about wanting a lower rate and wanting a house appraisal and applying for a 15-year loan, than a 30 year loan will help reduce the interest rate on mortgage significantly. One must bring financial records including bank statements, copies of bank tax returns and pay stubs while meeting with the loan officer. A new refinanced loan with a shorter time period and a lower amount, subtracting the money used to pay off the existing mortgage will lower the interest drastically.