{"id":19728,"date":"2025-08-21T20:51:53","date_gmt":"2025-08-21T20:51:53","guid":{"rendered":"https:\/\/finderica.com\/?p=19728"},"modified":"2025-08-21T20:51:53","modified_gmt":"2025-08-21T20:51:53","slug":"how-to-prepare-for-a-mortgage-refinance-according-to-experts","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=19728","title":{"rendered":"How to prepare for a mortgage refinance, according to experts"},"content":{"rendered":"
<\/span><\/p>\n
\n
\n
\n

Sdi Productions | E+ | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n

\n

Mortgage rates have declined in recent months, and with the potential for a Federal Reserve rate cut this fall, it’s smart for homeowners with high interest rates to start preparing for the opportunity to refinance, experts say.<\/p>\n

Last week, mortgage rates slightly edged higher. According to the Mortgage Bankers Association, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $806,500 or less, increased to 6.68% from 6.67% for the week ending Aug. 15.<\/p>\n

But generally, rates have been edging down, reaching a 10-month low earlier in August.<\/p>\n

Lower mortgage rates often result in lower borrowing costs for home loans. Many homeowners have already jumped on the opportunity in recent weeks.<\/p>\n

More from Personal Finance:<\/strong>
What\u2019s keeping home buyers on the sidelines
Mortgage rates have made a ‘substantial improvement’
Student loan forgiveness remains unavailable under this repayment plan<\/p>\n

The refinance share<\/a> of mortgage activity last week decreased to 46.1% of total applications from 46.5% the week prior, according to MBA data.<\/p>\n

Whether the Fed cuts rates in September, it remains unclear how mortgage rates will react, according to Chen Zhao, head of economics research at Redfin. While the federal funds rate influences borrowing costs for Americans, mortgage rates closely track the 10-year Treasury yields, which are sensitive to changes in the economy.<\/p>\n

Overall, experts say it is important for homeowners with higher-rate mortgages to start paying attention to interest rate movements, and preparing for opportunities to refinance.<\/p>\n

“Getting the preparation done beforehand will allow you to move quickly,” said Keith Gumbinger,\u00a0vice president of mortgage website HSH.<\/p>\n<\/div>\n

<\/a>‘You probably need to move quickly’<\/h2>\n
\n

Before you refinance, you want to make sure mortgage rates have “dropped sufficiently” for you to see real savings, Melissa Cohn, regional vice president of William Raveis Mortgage, recently told CNBC.<\/p>\n

There are different rules of thumb used to determine when rates have declined enough. According to Redfin’s Zhao, homeowners should consider a refi if rates are at least 50 basis points lower than their current rate.<\/p>\n

Rates can change fast, so it’s smart to know that target number and start preparing ahead of time, experts say.<\/p>\n

“If you’re looking to refinance, especially in this type of interest rate climate, you need to be opportunistic, which means you probably need to move quickly,” said Gumbinger.\u00a0<\/p>\n

Here are five key steps to take:<\/p>\n<\/div>\n

<\/a>1. Take a look at your credit reports<\/h2>\n
\n

First, pull your credit reports from all three bureaus \u2014 Equifax, Experian and TransUnion \u2014 to understand how information on them is influencing your credit score. You can request them from the major credit bureaus for free via\u00a0annualcreditreport.com<\/a>.<\/p>\n

Knowing this detail will help you get more accurate rate quotes from lenders, according<\/a> to HSH. Unlike many other kinds of loans, with mortgages, lenders tend to look at scores from all three bureaus.<\/p>\n

If you notice any errors that could be inadvertently hurting your score, the sooner you fix them, the better, experts say. Reach out to the creditor as well as the credit reporting bureau, and explain the situation, said Gumbinger.<\/p>\n

However, it may take a bit of time to get the necessary parties involved and get the error fixed, he said.\u00a0<\/p>\n<\/div>\n

\n
\n
\n
\n
<\/span><\/span><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

<\/a>2. Protect your credit score<\/h2>\n
\n

You want to protect your credit score as much as possible. Generally, the higher your credit score, the better terms and interest rates you qualify for.<\/p>\n

If you plan to refinance in the near future, avoid doing things that could hurt your score, such as applying for new credit cards or other lines of credit, or making sudden, big purchases that you can’t pay off quickly, and avoid making late payments.<\/p>\n<\/div>\n

<\/a>3. Estimate your level of home equity<\/h2>\n
\n

After checking your credit history, estimate how much equity you have in your home. If you have at least 20% equity in your home, you will get better loan terms from lenders, according <\/a>to Bankrate.<\/p>\n<\/div>\n

<\/a>4. Start gathering essential documents<\/h2>\n
\n

If you believe you’ll benefit from a refi soon, HSH recommends gathering the following documents:<\/p>\n