You see the advertisements for low current refinance rates in Colorado and you wonder how you too can get them. While not everyone will get the lowest rates lenders to advertise. With the right qualifying factors, you put yourself in the best position for the lowest rates.
Fix your Credit
Start by looking at your credit. Most people don’t even know what their credit score is or what’s reported in their credit history. Since this is the first thing lenders/underwriters look at, you should check your credit first.
Everyone gets free access to their credit report (not score) here. Pull your reports and see if there’s anything you should fix. Such as late payments, overextended credit lines (more than 30% of your credit line outstanding), mistakes, or fraudulent activity.
The sooner you fix your credit, the higher your credit score will be when you apply for a mortgage.
Lower your Debt
Your debt-to-income ratio is the next most important factor underwriters consider. Your DTI is a comparison of your monthly debt to your income. If you have too much of your income committed to current debts, you become at a higher risk of default on a mortgage.
The ‘sweet spot’ is a 43% debt-to-income ratio. This means no more than 43% of your gross monthly income (income before taxes) is committed to current debts. With a DTI lower than 43%, you’ll put yourself in a position to get the lowest current refinance rates in Colorado.
Stable Employment and Income
Underwriters also look for income stability. Ideally, you should have a 2-year employment history at the same company and either stable or increasing income.
If you changed jobs within the last 2 years, it’s not a deal-breaker, necessarily. If you stayed in the same industry or have proof of training or education that will help you succeed at your new job, it can help, but stability is the key to securing the lowest rates.
A Large Amount of Equity
The more equity you have in your home, the less like you are to default. Even if you’re borrowing from your home’s equity with a cash-out refinance, leaving enough equity in the home lowers your risk of default.
Most homeowners will do what they can to make their payments on time if they know their own money is at stake. The more equity you have, the lower the lender’s risk, which means a lower interest rate.
If you’re in the market to refinance, let me help you get the lowest current refinance rates in Colorado. We’ll look at your current situation and see what you can do to improve your chances of securing the lowest rates.
Whether you’re looking to do a rate/term refinance just to get a lower rate or better term or you have equity to tap into. I can help you take advantage of today’s low interest rates, saving the most money and making the best personal finance decisions with your home.