As of August 2018, many American economists are expecting mortgage interest rates will increase for two reasons: monetary policy set by the United States Federal Reserve and the 10-year yield on Treasury bills. In late July, the average interest of a 30-year fixed rate mortgage stood at 4.6 percent and the Treasury yield was near 3 percent.
All forecasts suggest the Treasury yield will reach 3.3 percent this year, which would boost mortgage rates to 5 percent. Coupled with the projected prime rate increases, average rates of 5.5 percent are virtually guaranteed in 2018. If you’ve been thinking about refinancing the mortgage on the Irvine real estate you own, now would be a good time to do so. Here are some strategies you can use to get your refinance application approved.
Boost Your Credit Score
Your credit score will make all the difference when underwriters sit down to review your application. Even when interest rates are low, an unfavorable credit score may result in points and annual percentage rates that make the refinance effort not worth the cost. Give yourself a three-month window to correct errors on your report and pay down as much debt as possible before filling out your refinance application.
Time the Market
Mortgage interest rates are not only contingent on Treasury yields and Federal Reserve policy. They are also subject to market gyrations. Search for mortgage interest rate news on websites such as CNBC and the Wall Street Journal. When rates go down for two consecutive weeks, lenders tend to be in a better mood to issue approvals.
Pay Down Mortgage Points
Once the lender issues a good faith estimate, look at the section that lists the discount and origination points. A common strategy among mortgage borrowers is to come up with upfront cash to lower the APR. However, if the underwriting review suggests an approval may be trickier than expected, you can propose to pay these points to make the deal more attractive to the lender.
Get Your Home Ready for Appraisal
No mortgage lender will agree to refinance a loan unless the subject property is worth more than the amount that will be borrowed. With this in mind, you’ll need to prepare your home for the appraiser. Think about curb appeal. The adage about making good first impressions certainly applies to appraisals. Clean up the outside of your home and invest in exterior repairs and improvements. If you’re waiting on your credit score to increase, you’ll have enough time to complete improvements to your kitchen and bathrooms, which happen to factor significantly when the appraiser comes around.
Dispute a Low Appraisal
If the appraised value is holding up the approval, consider disputing the appraisal. One strategy in this regard is to ask for a full appraisal, which would have to come out of your pocket, but you can also request a local appraiser. Doing so in an appreciating market such as Irvine will allow time for comparable sales to complete, thus increasing the potential of a higher appraisal.
Whether you want to live in Quail Hill or West Irvine, homes for sale are on the market and ready for you to purchase. Get in touch with one of the trusted agents at Irvine Residential Living today to see the latest listings. Call 714-454-6304.