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Comparing refinance rates - The basics
Learn how to compare mortgage refi rates
When comparing mortgage refinance rates, pay attention to the APR because the APR takes into account your closing costs. The interest rate alone does not tell you anything about your closing costs. For example, one lender might have a lower interest rate, but their closing costs are high.If the APR is low, but closing costs are high, this usually means that there are "discount points" which you pay up front to get a lower interest rate. This might be worthwhile if you plan to keep the loan for its full term (e.g., 30 years). But if you plan to payoff the mortgage earlier (such as when you sell a house), then the lower rate might not be worth the up front cost of discount points.
How to compare lenders on our website
When you access the lender-comparison page at LoanFactory, finding the the most competitive refinance rate is straightforward. You want to find the "sweet spot" where you're paying no closing costs (or very little), while getting a great interest rate. As you scroll down the list of rates, look at the Closing costs column and try to find one that is green. A green dollar value means you're getting credits back at closing, rather than paying closing costs. This is a good starting point. You can then decide if you want to pick a lower rate above it, and pay for some closing costs, or get a higher rate that gives you credit back at closing.
Deciding whether to refinance or not
Here are some common reasons people refinance
There are several reasons people choose to refinance their mortgage:- To get a lower rate and reduce their monthly payment
- To remove mortgage insurance
- To shorten the term of a mortgage (e.g. to a 15-year term instead of 30 years)
- To convert from an adjustable mortgage (ARM) to a fixed rate mortgage
- To cash out equity and use it for things such as home improvement or large purchases
When should I refinance?
Every person's financial situation is unique, and answering this question depends on whether a mortgage refinance will improve your personal situation.- Interest rates are falling: If interest rates are falling significantly below the rate of your current mortgage, then refinancing might be a good way to reduce your monthly payment as well as your overall interest cost over the life of your loan.
- Need a lower monthly payment: You can lower your monthly payment by refinancing into a lower rate or a longer term. Keep in mind that refinancing into a longer term can lower your monthly payment, but will generally result in more overall interest paid. If you're struggling to keep up with your current monthly payments, this might be a good strategy.
- Gaining stability with a fixed-rate mortgage: If your current loan is an adjustable-rate mortgage (ARM), refinancing to a fixed-rate mortgage may offer more financial stability by making your monthly payments more predictable.
- More resources: Fannie Mae has a nice write-up on reasons to finance.
How do we have so many lenders?
How we're able search rates across 200+ lenders
As a Loan Officer with Loan Factory, a mortgage broker, I'm able to find competing rates across Loan Factory's vast network of 200+ lenders and pick the one that best fits your needs. When you access the lender-comparison page at LoanFactory , everything is very transparent and you're able to compare multiple lenders rates and closing costs to make sure you're getting an extremely competitive offer.More competition gives you you the advantage
Unlike a bank or individual lender, we're able to get interest rate quotes from many lenders as a mortgage broker. This allows you to compare rates and closing costs easily before applying, right on the screen.
Related articles and blogs |
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LoanDanny Staff
Should you refinance your mortgage if rates drop? When you refinance into a mortgage with a lower interest rate, it usually results in a lower minimum monthly payment. However, if you are refinancing into a new 30-year mortgage, you're paying interest for longer.