4.25% 30 Year Fixed Rate
Loan Amount
Loan Type

Program Rate APR
30-Yr fixed 4.750 % 0.7 to 1
15-Yr fixed 3.750 % 0.7 to 1
5/1 ARM 3.125 % 0.7 to 1
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Poor Economy mean Historically Low Rates

Over the past few years, the poor economy has forced the federal government to keep key interest rates at historically low levels. While the economy has led to many financial troubles for individuals, the one benefit of it has been extremely low mortgage rates. With mortgage rates at historically low levels, now would be an excellent time for anyone to try and refinance their mortgage. In many situations, people could save thousands of dollars per year in excess interest charges by simply refinancing into a lower-rate mortgage.

While most people could benefit greatly by refinancing into a new mortgage, the tightening credit markets have made refinancing far more difficult for people looking to refinance their mortgage. While current mortgage rates are extremely low, qualifying for the best mortgage rates will require you to meet several stringent pieces of criteria.

In order to qualify for the best mortgage rates, you will first have to have a very strong credit score. A few years ago, most banks were willing to lend to people who had a credit score of at least 620. Since many of these people with low scores ended up defaulting on their loan, banks now require that people have much better credit scores to get a new mortgage. To qualify for a mortgage refinance, you must have a history of paying your mortgage loan on time and must have a score of at least 680. In order to take advantage of the lowest possible rates, you will have to have a score of at least 740.

Beyond having a good credit score, to take advantage of the low current mortgage rates, you will also need to have some equity in your home. During the housing boom, most mortgage lenders were comfortable giving borrowers up to 100% financing as they assumed housing prices would only go up. As the housing prices have declined, many owners are now underwater, which means that banks have had to take a loss if the borrower defaults. To ensure that they do not take a loss, all banks require that borrowers have at least 10% equity in their homes upon a mortgage refinance. Also, if the borrower has less than 20% equity, they will have to pay private mortgage insurance.

Most lenders will also need to ensure that you have strong recurring source of income. They will likely request recent pay stubs, bank statements, and tax returns to verify that you can afford the mortgage payment on a recurring basis.