What Affects 30-Year Fixed Refinance Rates?


Quick Answer

Credit scores, loan terms, loan size, loan-to-value ratio and loan lock length can all have an effect on refinance rates for 30-year fixed-rate and other types of mortgages, according to Bankrate. Because of the disparity among qualifications for borrowers, many times an advertised refinance rate is not the rate that the borrower ends up receiving.

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What Affects 30-Year Fixed Refinance Rates?
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Full Answer

As a general rule, the lower a borrower's credit score, the higher the rate of refinancing the home; inversely, a good credit score is synonymous with lower refinancing rates.

The length of the loan makes a difference in its rate. Generally, 30-year fixed-rate loans usually have higher rates than 15-year loans. Loan size has an affect on interest rates paid. Interest rates are usually higher for larger or jumbo loans than for smaller loans, due to conforming loan limits. However, once a loan gets truly small, then the interest rate can also rise.

Another factor to consider is loan-lock length. If the loan is locked in for a longer length of time, the interest rate is higher. The type of residence being refinanced can also factor into the interest rate paid. Typically, condominiums are riskier to finance from a bank's perspective than town houses or single-family homes, so refinance rates may be slightly inflated.

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