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Why do Mortgage Refinance Rates Change?

How Credit Affects Mortgage Rates

If you’re shopping for today’s lowest mortgage refinance rates you might be frustrated to find that rates change on a daily, often hourly basis. You might also find that the refinance rate quotes you receive are much higher than the rates lenders are advertising. Here’s an article on HSH.com that explains the daily movements in mortgage refinance rates:

The simplest explanation–although not the only factors that determines mortgage rates–is that rates are closely tied to movements in bond markets. As bond prices rise, their yields fall, and it is these yields which influence mortgage rates up or down.

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The refinance rates that lenders advertise change on a daily, often hourly basis; however, the mortgage refinance rates that you’re quoted depend largely on your credit score. Advertised mortgage rates assume a credit score of 720 or better along with a favorable loan-to-value ratio. This chart illustrates how having a credit score less than 720 will affect your mortgage refinance rates and the total cost of financing your home.

How Credit Affects Mortgage Rates

There are steps you can take to boost your FICO score before mortgage refinancing. Most importantly, check your credit reports for errors before you apply. If you find mistakes in your credit reports you’ll want to dispute the error and allow enough time for a correction to be reflected in your credit score. Also, avoid opening new credit accounts for at least 90 days before shopping for mortgage refinance quotes.

You can learn more about getting today’s lowest refinance rates without paying unnecessary lender fees by checking out my free Underground Mortgage Videos.

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