If you are a homeowner looking to refinance your mortgage in Albuquerque, New Mexico there are steps you can take to ensure you get the best interest rate for your new mortgage.
Tune up Your Credit
Cleaning up your credit is easier than it sounds. The first thing you should do is check your credit report for errors. If you find errors on your credit reports you need to dispute the errors and have them corrected. If you live in the United States you have three different credit reports, one with each credit agency. Each credit agency has their own procedures for disputing errors. The three credit agencies are: Trans Union, Experian, and Equifax.
Improve Your FICO Score
Your FICO score is a number magically derived from your credit report. The company that creates the FICO score is not required to disclose how they calculate your score; however, your debt-to-income ratio is a large part of that score.
Your debt-to-income ratio is the ratio of your total debts (credit cards, car loans, personal loans, student loans, and mortgage) against your total income. The more debt you have the lower your credit score will be. The lower your credit score, the greater risk you are for mortgage lenders. You can improve your debt-to-income ratio and your credit score by paying down the balances on your credit cards. If you have credit cards you do not need you should close the accounts.
You can also improve your FICO score by paying your bills on time. Six months of on time payments before applying for a mortgage will improve your credit score. Never make major purchases while shopping for a mortgage or let lenders access your credit report until you have chosen a mortgage. Too many credit inquires from mortgage lenders can damage your credit score.