Better Interest Rate If Purchasing or Refinancing Real Estate?

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Will I Get a Better Interest Rate If I’m Purchasing or Refinancing Real Estate?

Better Interest Rate If Purchasing or Refinancing Real Estate?

There is normally no interest rate difference whether you are purchasing or refinancing real estate. The mortgage loan itself does not distinguish a difference in a purchase or refinance. However, there are times when you might find a “deal” just when you need it.

For instance, a lender may be having a “no closing cost sale” that might fit into your plans. While the interest rate will probably be a bit higher than market, you could save over a thousand dollars using this feature. Also, in a period of declining rates, you could refinance multiple times without incurring repeat closing and settlement expenses.

You might find that one or more lenders want to close more purchase-money (real estate purchases, not refinances) mortgage loans and offer a slightly discounted interest rate (one-eighth to three eights per cent) for home buyers. Conversely, during a period of declining rates, some lenders might offer periods of discounted interest rates, particularly for refinances to generate more volume. They believe they are covered, as rates decline, because they hope to be at market rate soon after closing.

In normal conditions, however, there is not usually a difference in interest rate whether you are purchasing or refinancing. The rate differences are normally attached to the type of mortgage loan product (15 year fixed, 30 year fixed, one year ARM, three year ARM, etc.) you select, not to your purpose for it.

   

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