The main criteria for refinancing your home is not your credit score but rather how much equity you have in your home. Nevertheless, the better your credit score is the more likely you are to obtain a better rate. Typically, the best rates on refinancing are reserved for those that have a credit score of 680 or higher, but occasionally case by case exceptions can be made for those who have a credit score as low as 620.
If your credit score is below 680 than it is in your best interest to consult with a mortgage broker who can help you get the best rates for your financial situation. A mortgage broker can even and help with implementing strategies for improving your credit score even if your credit score is below 620 and work with you to bring up your credit score back up to 680 rating.
What is Refinancing?
Simply put a mortgage refinance is when you break your existing mortgage in order to get a new one. This might be done for any number of reasons ranging from, just wanting to get a lower overall interest rate to wanting to access cash from the equity in your home or just want to consolidate debt and even increase your monthly cash flow.
Since refinancing involves breaking your mortgage, there is usually a financial penalty that will go along with it. However, the closer you are to your mortgage renewal date, the lower this penalty is likely to be. For those who have just recently renewed their mortgage, refinancing may not be the best option as it will likely be more expensive than other strategies such as getting a second mortgage.
Why Work with a Mortgage Broker When You Are Refinancing:
If you wish to refinance, it is recommended that you do so with the help of a mortgage broker. The advantages of working with a mortgage broker include:
- They can help you determine whether refinancing is the right choice – as mentioned refinancing can trigger a financial penalty. A mortgage broker will do the calculations for you to determine how much money you can save with refinancing versus how much you might save using other mortgage strategies. They will then recommend the best course of action for you.
- A mortgage broker will help you find the best rate to address your situation. Especially if you do not have perfect credit, then you want to work with a mortgage broker who can help you find the best possible rate for your mortgage refinance. Since a mortgage broker only needs to run one credit report (as opposed to the several that would be run if you were trying to compare refinancing rates on your own with mortgage lenders), it will be less harmful to your existing credit score.
If you are considering refinancing your mortgage and you would like to learn more, contact me today to set up and appointment.