Refinancing Home Loan Rates

What You Should Know About Refinancing Home Loan Rates

When taking on the refinancing of your home loan, in order to reduce your rates, it’s important to review the marketplace and speak with experts about the latest options. Our team at Summit Mortgage Corporation has many years of experience guiding clients on mortgage refinancing and in this new post, we’ll explain what you need to know about refinancing a home loan.

Your debt-to-income ratio

Your debt-to-income ratio should be a leading consideration when refinancing home loan rates. The data shows that overall debt-to-income levels should be less than 45%, so you might wish to pay off some of your debt before beginning the refinancing process. Your lender will have strategies to consolidate or eliminate debt using your home equity and in many cases you can pay off debt through refinancing your mortgage loan.

The costs of refinancing

The cost of refinancing a home loan can be anywhere between 3-5% of the home loan total. But there may be ways in which you can reduce this total cost or include it in the mortgage payments you’re already making. Some lenders offer no-cost refinancing, but this may lead to you paying a slightly higher interest rate to cover your costs. Costs can be offset and recouped by savings gained through refinancing and rarely do borrowers pay out of pocket for mortgage costs.

The rates vs. the term

The term of the mortgage should be a leading consideration when establishing mortgage value. To reduce your monthly costs, you’ll want to have the lowest interest rate and the longest term possible. Make sure that both the term and the interest rates match your goals so that your financial position remains strong.


When homeowners have less than 20% equity in their home, they pay private mortgage insurance (PMI) to safeguard the financial investment of the lender. If you’re refinancing your home loan at new rates, you may find that your home has lost value and you now have less than 20% equity in the property, requiring you to pay PMI. Be sure you discuss potential PMI costs with your lender as you consider refinance options.

Our trusted and experienced team at the Mortgages Diversified Team at Summit Mortgage Corporation can help guide you in saving money on your home loan refinancing process. To discover more about this topic, call us today.


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