What Credit Score Can Impact Refinancing My Home Mortgage?
The first thing that a person will think about when they borrow money or refinance their home is their credit score. This mysterious number has a very large impact on all borrowing that a person does, and this includes when a person wishes to refinance their home.
How credit scores work
A person’s credit score is a single number that demonstrates the risk associated with lending that person money. Paying a bill late or not at all will reduce the credit score. Keeping a clean record or having a very low amount of money owed will increase a credit score. A credit report from one of the major bureaus will include the credit score as well as most of the information that was used to calculate that number.
The fact is that every credit score will impact a refinance on a person’s home mortgage. The credit score is used as an indicator of risk, so the lower the credit score, the more risky a customer is seen to be. Therefore, that customer will either have to pay more in interest, will have to make a larger down payment when first given the loan, or may be denied the loan altogether. A very good or high credit score works in the opposite way.
What one can do about it
Simply put, it is best to try to keep a credit score as high as possible if one plans to refinance a home mortgage or do any other borrowing at all. The credit score affects every area of a person’s life, and has a huge impact on borrowing. Therefore, responsible borrowing, paying bills on time, and staying conscious of money spent is the best way to ensure that a credit score will not impact refinancing a home mortgage.
*Affects pricing. With the No Closing Cost
Option, borrowers finance the closing costs instead of paying for them at
closing. Borrowers who pay closing costs at closing may qualify for a lower
interest rate. Some upfront fees (ex. credit report and appraisal) may apply
and may be credited at closing.
*Refinancing or taking out a home equity loan or line of credit may increase
the total number of monthly payments and the total amount paid when compared to
your current situation.
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