Mortgage interest rates reached record lows last month, giving many homeowners a substantial reason to pursue refinancing. However, if the current rates aren’t enough to persuade you, or other factors are holding you back, staying prepared to refinance is still a smart strategy. 

Most experts agree that a dramatic rise in interest rates is unlikely to occur soon, giving you time to maximize the opportunity for savings. Proactively defining your reasons for refinancing and positioning yourself to have the strongest possible application will ensure you are ready when the right time arrives.

Get Organized

Start by confirming you have access to the financial documents that a lender will want. This will likely include bank statements, tax returns, investment accounts, and W-2s from your employer or other proof of current income. Beyond the paperwork, a typical refinance includes having your home appraised. Identifying and repairing any significant problems with the house can avoid unnecessary deductions from your property’s value. 

You should also consider what you hope to accomplish by refinancing. Is your goal to reduce the total amount of interest you will pay in the future, cut down on your monthly payment, or access some equity? The resulting plan will have implications for when and if you move forward. 

Crunch the Numbers

Choosing to refinance should involve more than just finding a lower interest rate. Since the savings from a rate reduction take time to accumulate, it requires careful calculations and a forward-looking approach. The process begins with closing costs that come with refinancing. You’ll want to compare that number to the interest savings to determine how long it will take for the lower rate to warrant the upfront costs. If you intend to change the length of time remaining on your mortgage, remember to take that into account as well. 

Even before you begin shopping for a refinance, you can use some rough calculations based on your current interest rate, today’s rates, and how long you expect to remain in the home to get a realistic idea of your potential savings. Typically, a cut of 1-2 percent is worth pursuing, if savings is your primary concern. Those looking to access equity or change the term will need to consider their home’s current value and the impact of a longer or shorter term, respectively. 

Focus on Your Credit

If a refinance is even remotely on your radar, it’s never too early to review your creditworthiness and work to improve it. Paying down debt, avoiding missed or late payments to other creditors, and correcting any credit report inaccuracies are all critical. Raising your credit score will give you the best possible chance of finding a lender to refinance your mortgage in your favor. offers the tools and resources to simplify your mortgage search. From comparing your loan options to repairing your credit, you’ll find helpful information and answers to your questions. Go online today, or call to speak with one of our experienced loan originators.

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