Factor You Should Never Forget When Considering a Refinance

Factor You Should Never Forget When Considering a Refinance

Credit score on a laptopAs a borrower, regardless of the type of loan you’ll apply for, you can only expect approval when you can prove your financial responsibility. This means you have to display your ability to repay what you owe, and your history can tell lenders a lot about this. And one-way lenders can verify this is through your credit score.

Borrowers with a stellar credit score almost always get the best mortgage interest rate. This means they usually spend a lot less when it comes to paying back their housing loan. And the same goes true for those who apply for a Salt Lake City mortgage refinance program.

Credit scores and its influence on home loans

A common mistake a lot of consumers make is thinking that their huge income and considerable assets will compensate for their low credit score. Although lenders still take these two into consideration, their decision still largely depends on a borrower’s history of paying back financial dues. And even if a homeowner qualifies for refinance with bad credit, chances are, he/she won’t enjoy the best rate.

Bumping up your credit score for a better refinancing rate

There are several things you can do to boost your credit score, but the first thing you should do is learn about the ranges. For instance, scores that fall under the “below average” category includes 640 or lower. On the other hand, an excellent score mean a 720 or higher. Knowing which category your score places can give you an idea of how much you need to work on.

All in all, you should consider polishing your credit score first before you push through with your decision to refinance. In case, you have already started with your credit score improvement plan, then you just need to wait for a short period before you’ll notice the results. Note that even just a slight increase can already warrant a much better refinance rate.