What should I do to get lower interest rates when I get a mortgage refinance loan?

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(Pardon me if my terminology is not proper. I’ll do the best that I can.)

I have about $ 40,000 in school loans that will be paid off over a 10 year period through various lenders. Most of the interest rates are between 4.75% and 5.25%. Some are as low as 4.25%.

My wife and I bought our house 1 year 6months ago with a 5.5% interest rate. I was told that we could probably secure a rate of around 4.5% right now through a refinance without having to pay any points.

Would it be financially wise to refinance the mortgage with these low rates being offered, while simultaneously trying to ask for an additional amount to pay off my students that have rates higher than 4.5%?

My limited knowledge in this area tells me yes, but I’m sure there are pitfalls and caveats. Any help would be appreciated, and I’d be happy to provide more information as needed.

6 Comments
  1. Reply
    sporregar
    February 9, 2011 at 7:23 am

    You have to shop around for the best one. That’s not saying they will be less than your original mortgage rate was because rates have gone up.

  2. Reply
    lepr0kan
    February 9, 2011 at 7:41 am

    Shop around to different brokers and compare Good Faith Estimates, don’t hesitate to negotiate with them based on the GFE’s you receive from others. On the personal side the best way to get a great interest rate is by having strong income, assets, a lot of equity in the home, and a high credit score, plus you can always buy discount points to lower the rate (but this is only worthwhile if you plan to own the home for a long time)

  3. Reply
    Isabella D
    February 9, 2011 at 8:00 am

    You could close inactive credit card accounts. Go to http://www.whataboutloans.com/mortgage/mortgage-refinance-loans.html
    for more information.

  4. Reply
    evensonhimself
    February 9, 2011 at 8:43 am

    if another person tells you to close inactive credit card accounts i’m gonna go bananas! that doesn’t get you a lower interest rate on your home!

  5. Reply
    Ryan M
    February 9, 2011 at 9:22 am

    No one is going to let you refinance for MORE than what the house is worth. The ONLY way that would be possible is to refinance, THEN take out an equity loan (assuming that you have more than $ 40k in equity) to pay off the student loan. They arenot going to simply hand you extra cash to pay off debts unrelated to the house.

  6. Reply
    WHAT
    February 9, 2011 at 9:26 am

    I would advise you this: If the mortgage company is willing to loan you enough to completely pay off the student loans, and it appears to me to be a better rate all around, then yes. But you must promise to pay at least the amount you are currently paying on both loans, when added together. That will then benefit you the most. But if you are thinking of just paying the minimum, then no, because you will be now paying 30 years on the student loan money, and you really should target that with in the ten years, or you are just foolish.

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