Refinance Your Mortgage as Rates Drop Below 3%

In response to the FHFA’s recent announcement to eliminate the 0.5% adverse market refinance fee, mortgage lenders are driving mortgage rates lower in a race to compete for business. In the past two weeks, mortgage rates in Oakbrook Terrace have dropped substantially, falling below 3% for qualified borrowers.  The change went into effect on August 1, 2021. 

If you’re ready to refinance your mortgage, this is good news. Whether you want to refinance your mortgage for a lower payment, apply for a cash-out refinance, or refinance a mortgage for a lower rate, now’s the time to take action.

Connect with a local mortgage advisor to start the process early and lock in a low mortgage rate before mortgage rates in Oakbrook Terrace start to rise again.

Related: 2021 Advantages for First-Time Homebuyers in Oakbrook Terrace, IL

How to Refinance Your Mortgage and Save Money in 5 Steps

Every borrower wants the best rate possible, and lenders will compete for your business if you’ve got a good financial track record. Borrowers with a good credit score and a low debt-to-income ratio will have leverage when comparing rates. But even if you’re financial picture isn’t where you’d like it to be right now, these tips will help you prepare.

When you apply for a mortgage refinance in Oakbrook Terrace, the top three factors that will impact your mortgage application are your credit score, debt-to-income ratio, and home equity (loan-to-value ratio).

Follow these five steps to leverage your knowledge and approach mortgage lenders in Oakbrook Terrace with confidence.

Step 1: Protect your credit score.

Download a free copy of your credit report so you can resolve any errors or misinformation. If you have high consumer debt or multiple loans, pay down the balances to improve your credit score.

Keep making your payments on time and don’t take on any new debt or apply for new credit lines. Now’s not the time to open a new credit card or apply for a car loan. Keep your credit report as clean and consistent as possible when you’re ready to refinance.

Step 2: Shop around for the best local mortgage refinance lender.

Just because rates are low doesn’t mean lenders will give you the best mortgage rate. Shopping for the best rate is a common strategy for most homeowners in Oakbrook Terrace, but it’s smarter to shop around for the best mortgage advisor in your area.

Yes, mortgage rates are one of the main factors borrowers consider when refinancing a mortgage. But the best loan terms are part of an overall package that goes beyond your interest rate. Fees, closing costs, points, and mortgage insurance are a few costs that can overshadow a low mortgage rate.

You don’t want to end up with a mortgage refinance that ends up costing you more and keeps you from meeting your long-term financial goals. 

We recommend shopping for the best local mortgage advisor in Oakbrook Terrace. Read reviews, check with colleagues, follow up directly when you find a low rate.

A great mortgage advisor will talk with you about your financial and homeownership goals. Together, you can refinance your mortgage in Oakbrook Terrace with a custom solution that checks all the boxes. You should be able to refinance your mortgage with a low interest rate, a better mortgage payment, and loan terms that meet your financial goals.

• Do they deliver exceptional customer service?
• Do they offer the refinance product you want (fixed, adjustable, streamline, cash-out, etc.)?
• Do they understand your financial goals?
• Do they have great customer reviews?

Related: When is it the right time to change mortgage lenders?

Step 3: Compare mortgage refinance offers to find the best loan.

Advertised rates are helpful metrics to find out where the market is trending, but refinancing a mortgage can end up costing you a lot of money if you’re not careful.

So, shopping for the lowest mortgage rate in Oakbrook Terrace won’t always get you the best mortgage refinance. Instead, compare your refinance offers side-by-side using the loan estimates provided by your lender.

The truth is, mortgage rates vary based on the borrower’s information, the loan product, and the lender. Certain lenders might advertise super low rates, but they might offer you higher rates than other lenders based on your credit score. The same goes for your debt-to-income ratio and your home equity.

When you apply to refinance a mortgage in Oakbrook Terrace, you’ll receive a quote, also called a loan estimate. Your loan estimate will offer a line-by-line breakdown that shows the terms of your home loan.

Prepare ahead of time and review this sample Loan Estimate. All lenders use the same format, so this will make it easier to compare refinance offers.

Step 4: Estimate the closing costs for a mortgage refinance.

Refinancing a mortgage in Oakbrook Terrace is about saving money for most borrowers. So if refinancing gives you a lower rate but high closing costs, it might not save you money in the long run.

Check out your Loan Estimate again to verify closing costs and any other fees that might be negotiable. Closing costs will be written in a different section and cover one-time expenses.

When you refinance a mortgage, many borrowers have the option to pay the closing costs upfront, roll them into the loan, or get a lender credit in exchange for a higher rate. 

To find out which fees are negotiable, check out this sample Loan Estimate.

Closing costs typically include:

• Origination Fee
• Appraisal Fee
• Credit Report Fee
• Prepaid Homeowner’s Insurance
• Prepaid Interest
• Property Taxes
• Mortgage Insurance

Remember these are one-time fees that you wouldn’t incur without refinancing a mortgage. One way to know whether or not refinancing your mortgage will save you money is to calculate your closing costs.

Related: The Truth About Closing Costs and No-Closing Cost Loans in Oakbrook Terrace, IL

Step 5: Lock your rate when you apply for refinancing.

Lenders vary in how and when they offer mortgage rate locks, so be sure to ask a local mortgage advisor about the terms. Often, borrowers have the option to lock in a mortgage rate early in the application process.

A float-down option often allows rate flexibility that protects the borrower: if market rates drop, the borrower’s rate “floats down” with the market; but if rates rise, the quoted rate stays secure. Mortgage lenders typically offer rate locks for 30 to 60 days. 

Ask your mortgage lender about locking your rate and what happens if mortgage rates shift. If the refinance process takes longer than anticipated, you don’t want the uncertainty of a fluctuating mortgage rate in the mix.

Related: A Complete Guide To Refinancing Your Mortgage

Final Takeaway

Refinancing a mortgage in Oakbrook Terrace can help you reach your financial goals faster. Take a minute to clarify your goals to make an informed decision once you get a loan estimate from your lender. Keep your credit report in check, take a close look at closing costs, and lock your rate if possible. Most importantly, shop around for the right mortgage lender and make sure you’re comparing apples to apples when you evaluate the terms of your refinance.

Next Steps

To get the best refinance rates and loan terms, work with a local mortgage expert from Claudio Prunotto Team. We’d love to discuss your financial goals and build a custom mortgage refinance that saves you money.