The majority of people who refinance their mortgage are doing so for one of two reasons. Either to get a lower interest rate or consolidate debt. Regardless of the reason why they are refinancing borrowers want the best mortgage refinance rate that they qualify for. Although the radio and newspapers are filled with ads for low mortgage rates how do you know if you are actually going to qualify for them?
In most cases if your mortgage payments have never been 30 days late and you are using under 90% of your home equity you will have a good chance to qualify for a low mortgage rate. However mortgage history is not the only factor in determining your mortgage refinance rate. Your consumer credit history is also going to play a role in your loan rate as will your Debt To To income Ratio.
Most conforming loans will be denied if the borrower has numerous consumer credit late payments on their credit record. This means that for every 30 day late payment to your credit cards that is recorded on your credit report your chances for a low interest rate decrease substantially.
Your debt to income ratio is also another very crucial factor in getting your loan approved for low conforming rates. Your debt to income is basically all of your bills including credit card, department store card, auto loans and mortgage added up and divided by your gross pretax income. An acceptable number is around 42% but some lenders will allow up to 50% with good cash reserves in a bank account or retirement account.
Although there are many more factors in determining your rate these are some of the major ones. But your best chances for the best rate come when you shop around and compare offers from at least three reputable mortgage companies.
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