If you are looking to refinance a home mortgage interest rate because the original rate was higher than the current national index, proceed with caution. There are extra fees and charges associated with closing that should be considered.

Mortgage loan interest rates can vary widely between lenders and between borrowers. In addition to the national index changes, each lender also has stipulations that determine what index a borrower will receive. Those with a great credit history and a larger down payment will most often receive the better index. Those with a good credit history and a small down payment may receive a low index, but each lender has its own regulations on the limit of the offer. If a borrower has a checkered credit history and a small down payment, they will surely receive the highest index allowed by law. In these cases it is important to review the reason for the purchases and anticipate for how many years the borrower is planning on keeping the house. An ARM or Adjustable Rate Mortgage may be a better choice as these types of financing programs typically hold a lower index in the beginning of the repayment schedule.

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