If you’re in the process of refinancing your home loan you’ll want the best refinance rates for your next mortgage. You might be disappointed to find that those teaser rates published by lenders are offered to very few homeowners and the mortgage rates you get depend on how much risk you present to the lender. Here’s an article by Dan Green at the MortgageReports.com about how maxing out your credit card affects your credit score and your risk to lenders when mortgage refinancing.
If you’ve ever wondered how your credit score would be affected by a missed payment or a maxed-out credit card, myFICO.com makes a a look-up guide available to assess the probable damage. Here’s a few common financial difficulties and how they’ll affect your credit scores, based on your “starting score”.
According to Dan maxing out a credit card can drop your credit score by as much as 30 points which is significant when mortgage refinancing. The subsequent increase in the best refinance rates offered to you could add as much as $50 per month to your payments! This is why it’s always a good idea to pay down your credit cards as much as possible a month or two before submitting applications for mortgage refinancing.
Another consideration for your mortgage refi is the fees and closing costs you pay. These fees determine how good of a deal you’re getting when refinancing because you’ll have to recoup these expenses before realizing any benefit from your lower payment amount. Paying junk fees like mortgage rate lock fees or yield spread premium lengthens the amount of time it takes to recoup your closing costs but more importantly takes cash out of your pocket.
You can learn more about getting the best refinance rates without unnecessary markup or junk fees by checking out my free Underground Mortgage Refinancing Videos.