There are 12 ways to can do this.
1) Raise your credit score. I know this has been mentioned a great deal, but it really does help.
2) Lower your debt. Lowering your personal debt will give you a better shot at getting a lower mortgage rate.
3) Increasing your home equity may give you a good shot. Look into what you are paying right now. Find out if it is worth it to have it lowered. Your equity is tied into your mortgage and other loans. Every situation is different.
4) Keep all financial documentation together. Keeping things messy is not a good way to begin. A refinance will take 2 years. This includes having pay stubs, bank statements, and W2s together. Keeping it organized will speed things up. It will also prevent you from paying more during an extension. Lenders like to see their customers organized.
5) Your closing cost will be about 2%. Save the extra cash for this. You could roll it over from another loan. Be careful with this one. You will still need the cash on hand. Do not spend it.
6) Begin your process by starting online. You can find some great offers not being offered anywhere else. Doing online research will give you some idea of what to expect before you meet with your guy. A short-term may be lower than a 3–year fixed, but it is still going to cost you more. It costs more because it is during a shorter span. You have to decide what works best for you.
7) You have to decide on a loan term. Only you can make this choice. Are you broke and coming out of college? You may want to go for the 30-year plan. Sometimes the short span of time does not make sense. You may be taking longer to pay it off, but you will be making lower payments.
8) Talk to many people in the business. Do not go for the first person you find. He may have a good deal, but there could be something better.
9) Review all your options with the guy you do business with. It is best to know everything going in. This is your money. It is your responsibility to have all the facts.
10) Decide the terms of the payments with your lender. Some lenders pay the closing costs and you pay more in the loan payments. This has to work for both of you.
11) You have to compare and contrast the mortgage rates and fees. This is not a one-size-fits-all deal. Not every deal is going to be fair for you. A rate that works for your neighbor, it may not work for you.
12) Every lock period is different. It all depends on the loan program and the money involved. Ask your lender when it is best to “lock in” to the deal. An honest lender will guide you in the right way.