Darci Marchese, wtop.com
WASHINGTON – Every time you think it’s impossible for mortgage rates to drop, they go down even farther. So what does it take to land those super low rates if you’re looking to refinance your home?
“The most important factors are equity and your credit score,” says Steve Cohen, a loan officer with First Place Bank.
He says to get the lowest advertised rate, homeowners need to have 25 percent equity and a top tier credit score, which now starts at 740. That’s up from 620, which used to be considered a top score.
What if homeowners have a good credit score, but it’s not 740 or higher?
“Minimally you should have 700 and you’ll be very close to the best rates,” Cohen says.
Extra costs
Even if you have all the qualifications, you could encounter surprises that could add to the cost to refinancing.
“The rate usually comes with a point or a fraction of a point,” warns Cohen and that can add to the cost of the refinancing.
If no points are included in the deal, customers would likely have to pay closing costs which could total $2,200 to $3,200.
But Cohen says many people are turning to conventional, “no closing cost” refinancing so they can refinance once, twice, even three times as the low rates continue to drop.
Typically a bank cannot help you refinance for at least six months but a customer can go to another lender to obtain another refinance deal faster.
Cohen says rates are very competitive from bank to bank, but it always pays to shop around.
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