If you are looking to refinance mortgage rates, then you should check over the forecast for the rest of the year to see if you can get a better deal later on. Here are the rates today along with the forecast for the rest of 2016 so that you can make an informed decision about your next move.
What are the refinance mortgage rates today?
The refinance mortgage rate that you get depends on many things: your location, the term of the loan, your credit score, and the upfront money that you bring to the deal.
What does my location have to do with the refinance mortgage rate?
Just as different locations have higher and lower property values and home insurance rates, they may also have different refinance mortgage rates based upon the surrounding market. For instance, the rate for a small town in Georgia with a 30 year loan term, 20 percent down, and a 740+ credit score is around 3.7 percent. In San Diego, you may be able to find a rate for those specs at 3.5 percent. There are many reasons for the differences.
In larger metropolitan cities with more competition in the lending industry, banks are forced to lower their rates in order to compete. High value buyers also tend to be more informed and prepared for a long negotiation, a process that usually results in a lower interest rate for the buyer. In smaller cities and rural areas, there is less competition, buyers are poorer and more unable to negotiate, which in turn empowers banks to hold onto their higher interest rates in those areas.
What happens when I increase or decrease the term on my loan?
Longer term periods mean more risk for the lending institution. The risk they take on is passed to the borrower in the form of a slightly higher interest rate. For instance, the interest rate for a refinance loan in San Diego over a 30 year term is around 3.7 percent, as mentioned before; however, the same banks will offer an average of 0.1 to 0.3 percentage points less on the interest rate for a 20 year fixed rate loan package. There is less of a chance that the borrower will have financial problems in 20 years than in 30 years.
What credit score do I need for the best refinance mortgage rate?
The best deals for refinance mortgage rates will be given to people with a credit score of 740 or above. Scores are tiered below that, with 700 to 740 receiving the next best rates. Scores in the 600’s will get a slightly worse rate than that, and usually scores below 620 will not be considered for a refinance at all. This is not a hard and fast rule, but it is a general rule of thumb unless you have an inordinate amount of cash on hand or a long history of commerce with a certain bank.
What does my cash on hand have to do with the refinance rate?
If you plan on refinancing, your bank will take a look at the cash that you have in various accounts and any cash that you are putting forward in the deal as a down payment. You can also pay mortgage points upfront in order to reduce your ongoing interest rate. More cash means less of a risk for the bank, and you may get a lower interest rate based on this security.
What do refinance mortgage rates look like today?
Mortgage rates continue to trend at all time lows, with most interest rates for qualified borrowers below four percent. The benchmark for determining the most publicized interest rate is the 30 year fixed mortgage period with 20 percent down, zero mortgage points paid up front, and a credit score of 740 or above. Any of those factors may change the interest rate, but borrowers can still stay well below four percent with a 20 year term, less money down, and at least a 700 credit score. Placing at least 20 percent down is advisable in order to avoid the additional charge of private mortgage insurance (PMI), a charge that can add more than a full percentage point to the interest rate of a loan over the course of a year.
What are refinance mortgage rates going to look like for the rest of 2016?
Real estate professionals from the Mortgage Bankers Association, Fannie Mae, and the Federal Reserve all have different forecasts for the rest of 2016. The Mortgage Bankers Association expects the benchmark mortgage rate to reach above five percent by the fourth quarter of the year. Fannie Mae analysts expect those rates to top out at 4.2 percent in quarters three and four. The Federal Reserve  plays a huge part in determining the overall rates in the market, as it sets the rates at which banks borrow money. However, to hear them tell it, they cannot predict how their own rates will act in 2016, so it is still anyone’s guess how they will react. So far, they have kept rates at historic lows and seem content to keep them there until the economy gets back to full health.
2 Point Highlight
For instance, the interest rate for a refinance loan in San Diego over a 30 year term is around 3.7 percent, as mentioned before; however, the same banks will offer an average of 0.1 to 0.3 percentage points less on the interest rate for a 20 year fixed rate loan package.
The benchmark for determining the most publicized interest rate is the 30 year fixed mortgage period with 20 percent down, zero mortgage points paid up front, and a credit score of 740 or above.
