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Refinance Mortgage Rate Today: Factors that Affect Refinancing Interest Rates
Are you thinking about purchasing your first home? Do you already own a home and you’re looking to take out a refinance mortgage? Whatever you’re specific situation may be, if you live in the Mecklenburg County, NC area and you’re looking for mortgage companies near me, you’ve come to the right place! Jet Direct Mortgage is a leading Charlotte Center City mortgage company that has successfully helped countless residents throughout the region secure the best rates in the fastest time frame possible. If you want to work with one of the best mortgage companies in the area, get in touch with us today!
Factors that Affect Refinance Rates
Homeowners across the country are becoming increasingly interested in refinancing their existing mortgages. Considering the near-record-low interest rates, it’s easy to see why. If you can lock-in a lower rate than you’re currently paying, you could save a hefty sum of money. However, if you’re thinking about refinancing before you proceed, understanding how the process works is important; specifically, you should familiarize yourself with how to refinance mortgage calculations work.
When determining refinance mortgage calculations, there are several factors that come into play. Of all of those factors, interest rates have one of the biggest impacts on your mortgage calculations and the amount you’ll end up paying. But refinancing rates change on a regular basis; the refinance mortgage rate today may be different next week or even tomorrow. What factors affect the rate you’ll get when you refinance? There are several, and while some of them you can’t control, some you can. Let’s take a closer look at these factors so that you can better understand how to refinance mortgage calculations work so you can get the best interest rate possible.
Factors You Control
There are several factors that you have direct control of that will have a direct impact on the rate you’ll receive when you refinance your mortgage. These factors include:
- Your credit score. Your current credit score will have a big impact on the rate you get when you refinance your home mortgage. Typically, you’ll get the best rates if your credit score is at least 740; however, even if your credit score is lower, you may be able to get a decent rate. Speak with a mortgage broker to find out what types of rates you can get with your current credit score and to find out if there is anything that you can do to improve your score so you can secure a better rate.
- The loan-to-value ratio. If you don’t have a lot of equity in your property, you may need to put in some money up-front when you refinance. If that’s the case, the loan-to-value ratio is a factor that may impact the rates on your new mortgage, and it’s a factor that you can control. The loan-to-value ratio weighs the amount of the mortgage compared to the value of your home. For example, if you’re refinancing a house that is valued at $100,000 and you put down $20,000, you’ll have to secure an $80,000 loan. or 80% of the property value. As such, your loan-to-value ratio would be 80%. Generally speaking, values that are greater than 90% are considered high, which many lenders consider a “high risk” and may charge a higher rate. However, if you put down a larger amount, you’ll reduce the loan-to-value ratio and may be able to get a better rate when you refinance.
Additional factors that you may control that could affect the interest you’ll be able to get when you refinance include securing an adjustable-rate mortgage and cashing out on refinancing.
Factors You Can’t Control
There are also several factors that are beyond your control that will affect the interest rates offered on refinancing loans. Rates fluctuate on a constant basis and vary depending on numerous economic indicators, such as the existing and project inflation rates, as well as the rate of unemployment. To further explain, the factors that are beyond your control include that effect refinance mortgage rates include:
- The general economy. The rates on home mortgages usually rise when fast economic growth is projected, when the unemployment rate is low, and when inflation is higher. When the economy starts to slow down, the rate of unemployment is higher, and inflation starts to fall, that’s when the rates start falling.
- Employment rates. As mentioned, employment rates have a big impact on interest rates. Essentially, a higher employment rate means that more people are working, which means that it’s more likely a larger percentage of the population has more money to invest; hence why interest rates tend to go up when employment outlooks are good.
- Rate of inflation. When inflation levels increase, usually interest rates on home loans increase, too. Why? – Because the dollar loses value when prices are higher. In order to compensate for this loss in value, lenders usually require higher interest rates. Since the rate of inflation has been relatively low for the past decade, mortgage rates have also been low.
- The Federal Reserve. While the Federal Reserve doesn’t set interest rates on mortgages, it does increase and decrease short-term interest rates in response to large economic movements. Therefore, the interest rates on home mortgages increase and decrease in accordance with the same forces that affect the economy. While mortgage rates and Federal Reserve rates are independent of one another, typically, the rise and fall in the same direction.
Looking to Find the Best Refinancing Rates in Mecklenburg County, NC? Contact Jet Direct Mortgage Today!
Interest rates have dropped significantly, making now the perfect time to refinance. If you’re looking to save money on your mortgage and you live in the varLocatoinName, NC area, get in touch with Jet Direct Mortgage, one of the leading mortgage companies in the area. Our team of experts will help you find the best refinancing rates that will help you save a substantial amount on your mortgage. To find out more or to schedule an appointment with one of our mortgage brokers, please give us a call at 855-553-4732 today!