We're reporting from the bargain basement as mortgage rates fell across the board again. With spring and busier times in housing markets anticipated, it's anyone's guess how long these low, low mortgage rates can last.
Whether you want to refinance your mortgage or are buying a home, last week's mortgage rates falling brought good news. HSH Associates reports that average combined rates for a 30-year fixed-rate mortgage fell by four basis points to 5.14 percent. Corresponding rates for a 15-year fixed-rate mortgage fell by three basis points to 4.47 percent. If rock-bottom rates are your choice, average combined rates for a 5/1 adjustable-rate mortgage fell by four basis points to 3.83 percent.
Mortgage rates low, and mortgage lenders less willing to lend
If you're ready to refinance with today's low mortgage rates, but find that your perfect mortgage loan is more elusive than a winning lottery ticket, make sure you have your bases covered. Here are some tips for assembling what you'll need to qualify for refinancing under today's strict lending criteria:
- Know your credit scores: Obtain current credit reports and credit scores before contacting mortgage lenders. You'll likely need a credit score of 740 or more to qualify for the lowest mortgage rates.
- Assemble paperwork ahead of time: To avoid hang-ups, it's worthwhile to assemble the paperwork required for mortgage loan approval ahead of time. These documents include, but may not be limited to:
- Two most recent pay stubs or direct deposit advices
- Copies of bank statements showing deposits and withdrawals for all accounts
- Your most recent two years of federal and state tax returns as applicable
- Copies of existing mortgage loan documents, including any previous refinance mortgage documents
- Verification of employment for the past two years
- Be able to provide proof of current home value: A licensed real estate broker can provide an opinion of value that includes recent comparable sales in your neighborhood, or you can hire a residential appraiser. Mortgage lenders will require their own appraisals during the loan approval process, but providing proof of your home's current value is helpful for establishing loan eligibility.
Request and review multiple mortgage quotes, and pay close attention to the annual percentage rate (APR) as well as any related fees for the refinance loans you're considering. Focusing on low rates alone can cause you to overlook excessive lender charges.