You Don't Need Perfect Credit to Refi Your Albuquerque Home
Mortgage rates under 3% are certainly appealing. But can you actually get one? The best rates might not be available to you if you don't have excellent credit. Still, you may be able to refinance your Albuquerque house if you qualify.
Minimum credit score
You will have more refinance options if your score is above 700. Although, contrary to popular belief, you can still qualify with a lower credit score.
“Credit requirements vary by lender and type of mortgage. In general, you'll need a credit score of 620 or higher for a conventional mortgage refinance,” said Experian. “Certain government programs require a credit score of 580, however, or have no minimum at all. As is true for other types of loans, the higher your credit score, the more likely a mortgage refinance lender will be to work with you. Not only are your chances of approval higher, but you'll typically receive a lower interest rate and more favorable loan terms than qualifying borrowers with lower scores.”
Going with a higher rate
In the long run, any rate drop will save you money, even if you are not eligible for the lowest rate. A .25 reduction in your mortgage rate will save you almost $100 a month. The savings will, of course, need to be weighed against your refi costs and the time it will take to recover those costs.
Buying down your rate
If you don’t qualify for the lowest rate and you want to go lower, you can buy down the rate. “Mortgage points are one way for homeowners to lower their interest rate,” said Bankrate. “When you pay for points on a mortgage, you are actually paying interest right now for the loan. In return, the homeowner can lock in a lower and discounted rate. The rate depends on how many points are purchased. Your mortgage rate will drop more if you purchase more points.”
One point is the same as a .25% discount in the mortgage rate, which will cost you 1% of the total mortgage amount. To lower your mortgage rate by a quarter point would cost you $3,000 on a $300,000 mortgage. “Homeowners can buy more than one point, depending on their financial situation.”
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