Question by sunshinecee: how can i take advantage of the low mortgage rates ?Bought ahouse last year and have a fixed rate?
I bought my house last year and ahve a fixed rate but now want to take advantage of the low rates prevailing today.My credit is not that good and refinancing could be a problem because of that
Best answer:
Answer by src50
You either refinance or you don’t. Consider the costs.
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refi. But that can create more of a problem if your credit is not that good. You’ll wind up with a higher rate anyway.
Work on your credit, bring the score up and then try again.
You only get a low rate IF you have good credit.
That’s the way the whole system works: prove that you can pay all of your bills on time and you’ll be rewarded because you’re a low risk of default. If you can’t pay your bills on time (no matter the circumstances), you are higher risk in the eyes of the lender and therefore have to pay more in interest as an incentive for that lender to work with you.
So you have a fixed rate now, and crummy credit, but would like to get a better rate. Do I have that right?
Well, you can apply to refinance, but your rate will be based on your current credit. Plus you’ll have to pay all the closing costs again, which could be a few thousand dollars.
In addition, many lenders will not lend as high a loan-to-value amount on a refi. If you borrowed 90% of the purchase price or more, you may not find a loan at all.
It would be better to work on your credit, and build your equity for a couple years. You don’t know what the rates will be in the future, but it will probably not be to your benefit to refinance now.
Call around and see what they have to offer. Many lenders will refund application fees if they can’t make the loan you want. What I mean is, they don’t know the rate until your credit is pulled. If the standard rate is 6% and once they pull the credit the best they can offer you is 7% and you don’t want it, you’ll get a refund. Anything other than the standard rate is a counteroffer. Be sure you know in advance how they deal with app fees and refunds.
You might can still refi with a questionable credit score, but now the issue is, will your property appraise for what you need?
What is your fixed rate now? If your credit score isn’t 680 or better, you aren’t going to receive a great rate. And refinancing costs thousands of dollars. You are probably better off staying right where you are.