what about mortgage refinancing nowadays?

Deal Score0

I bought several houses in my time and therefore thought I was an “expert” on getting a good mortgage. Now I’m looking for a straight answer on the best refinance rate, and a mortgage broker says pricing on loans includes factors that “were not there even one year ago”, such as: FICO score, loan to value, loan amount, occupancy, etc.” Can a mortgage rate vary according to my FICO score (or would I just be rejected if my score is too low)? What’s going on? Why is it so hard to get a mortgage rate out of a broker or a web site?

btw, I have great credit, 80% equity, live in the house, and want to re-fi $ 117k, in NC.

My spouse’s credit is bad enough that she can’t get approved for much, we’ve tried. We paid off everything she had outstanding and she is now on good terms in the sense of being current and paid off. She has been in good standing with payments and zero balances for about 10 months. She just recently applied for a very marginal line of credit and was declined. Can someone tell me about how long its going to take before my spouse’s credit score is repaired enough to reasonably expect to be granted a loan or be included on our mortgage? months? years? Should we try to get her a credit card with a very, very low limit to try and start to rebuild a consistent credit history. Currently she has 1 open credit card account that she doesn’t even use and her student loan. Would it be better to use the card or not? Will using it properly help her FICO score improve?

13 Comments
  1. Reply
    src50
    February 14, 2011 at 2:14 pm

    Most definitely your credit score will affect the deal you are offered. These are new times – the old easy credit is gone.

  2. Reply
    WilsonGraphics
    February 14, 2011 at 2:41 pm

    Wait, if possible hold off for at least a quarter or half year if possible. Government intervention in the mortgage industry is probably not done and depending on the conditions they set for lenders it may improve your chances of a decent deal. Presently borrowers are being subjected to far more scrutiny than even a year ago. Things will change, but…back to my original advice…if you can wait for a while do so.

  3. Reply
    Judy
    February 14, 2011 at 3:30 pm

    Keep in mind that mortgage companies do not go by the fico score.
    They look at your reports in detail, along with your salary, and employment history.
    Before you refi. Make sure that your credit cards are not using more than 30% of their available credit. Pay them to 0 2 weeks before you apply to refi if you can. I did that and got their lowest rate advertised.
    /

  4. Reply
    Flyby
    February 14, 2011 at 4:15 pm

    I spoke with a woman the other day who refinanced her home at 4.75% for 40 years. I don’t know if there is a prepayment penalty and she didn’t mention anything about closing costs. Unless you really need the money I would urge you to hold off on borrowing unnecessarily. Besides, rates may go down further. The bank who has my mortgage called a few days ago about a refinance. The only thing I remember about qualifications is that they require a FICO of at least 700. I am not sure if it was just their requirement or the industry in general. Most mortgage brokers will shop your loan and match your qualifications with what is available. A good mortgage broker can make things move much more smoothly than going direct with a bank or mortgage company. They can often get a better interest rate or terms.

  5. Reply
    Jets Smith
    February 14, 2011 at 4:17 pm

    There are different types of mortgage rate refinance options available nowadays.
    Adjustable rate mortgage -This is one very important type of mortgage rate refinance. This mortgage rate totally depends on the market condition. It goes up and down with the fluctuating market rates. If you decide on this kind of rate, for your refinancing, then your interest rate might go up in the middle of the term period.

    The website below may provide some insight for you.
    http://www.refinancing101.net

    Good Luck….!

  6. Reply
    Blicka
    February 14, 2011 at 4:55 pm

    Stop taking on new debt.

    Pay more than the minimum due on each account (even if it is only $ 1)

  7. Reply
    rjshori
    February 14, 2011 at 5:43 pm

    there is a great info and steps to working to improved FICO score: http://www.cnnmoney.com

  8. Reply
    New rider-- again
    February 14, 2011 at 6:27 pm

    Use the card… Minimally… each month and pay it off each month to get a consistant re-payment history. It will take a while but it will help. Also, get a copy of her credit report and make sure that everything on there is correct. I don’t know how many accounts that I had closed that were still showing up on my report as open accounts with balances and they had been paid off for several years.

  9. Reply
    That'll Happen
    February 14, 2011 at 6:27 pm

    Yes, using the card will help but only charge up to 30% of the credit line on it. If it’s a $ 500 credit limit, put $ 150 on it and pay double the monthly minimum. If it’s a $ 10.00 minimum, make a payment of $ 20.00 and do that for two months and then go out and charge another $ 40.00 on to it. This will help you with your credit score and should bump it up 2-5 points a month, depending on where you are currently at.

    I would wait to open another credit card until you’ve done this for at least 3 months, but 6 months would be better. Then, get either a secured or unsecured credit card and do the same. Never max it out though.

    You are never more than 2 years away from gaining some credit reliability, although deragatory items will stay on there for 7-10 years or longer. If you work at it for two years and make it a priority to fix it, I bet you will be considered a decent credit risk by then and have many more options open to you. Good luck!.

  10. Reply
    Stacy W
    February 14, 2011 at 6:51 pm

    Don’t even worry about FICO…. it something that all the credit card companies have come up with to make us all strive to be able to get more and more credit…. which is only bringing us all further and further down…. don’t charge anything, don’t get anything on credit…except maybe your home…. get the book by Dave Ramsey “the total money makeover” it’s a lot of help…. btw I have no FICO score because I have no credit cards, the only debt I now have is my home…. and I live easier than most of my friends……you don’t need it, they just make you think you do.
    or go to his web page http://www.daveramsey.com

  11. Reply
    Stanley D
    February 14, 2011 at 7:09 pm

    If she has paid of all her outstanding bills then I dont really see why she is still getting declined for a small line of credit. Maybe its because she only has bad credit which has since been resolved and there is nothing positive on her report.

    The first thing I would do is check her credit score/report and make sure that all her negative info has been removed. Also make sure that all info is up to date. Maybe payments that she made have not yet been removed. It wil take a LONG time for some of that info to come off her report but at least the report will show that balances have been paid off. So most impotantly, check her report. This will also allow you to see if there is anything that may have been missed.

    Now you need to adds omething POSITIVE to her report. Having the gas/electric/cellular/phone bills in her name might help. Make sure you apy all bills ON TIME. One late payment can really screw you. Anyway, this will build a positive payment history that can be used for obtaining credit, especially with lenders that allow “alternative” sources of credit. That is credit used for people who have little credit history. Bills like phone and electric bills can be checked to verify a persons creditworthiness.

    Opening a bank account and a credit card account will help. make sure you use the card so you can build a payment history with that bank. Believe it or not, some will argue that its better to pay over time as oppossed to paying your balance in full. Credit card companies like people who pay over time since they make more money as oppossed to someone who pays off the full balance. Just make sure that that you pay an amount thats SUBSTANTIALLY more than the minimum payment. I suggest an amount 5 TIMES the minimum payment.

    Lastly, what is the balance of her curent card. make sure that she owes LESS THAN 50% of her max. Anything more shows that she cant handle her card very well. I dont understand how people with a $ 1000 limit owe $ 950 on a card. When you balance is close to your limit then you get no advantage from the card. The $ 1000 limit is useless when its full because you cant use the card. It also shows that you either cant lower the balance or are not responsible enough to make higher payments. They like to know that you can handle a balance. If you limit is $ 1000, NEVER let your balance surpass $ 500. Others would suggest an even lower amount.

    Another option would be for you or someone else to cosign a loan for her that she pays off within a few months. Its easier to get because of the cosigner and it builds her history.

    Also check her student loan. That can be a killer if its in default status. make sure its in good standing and that its reported to be in good stating on her credit report.

    Im no credit expert, but I hope this helps.

  12. Reply
    Smoovy Loco
    February 14, 2011 at 7:25 pm

    Yes, you have to have open and active accounts for them to report. If she has one credit card, what you can do is open her up a secured one. You may want to check where you do your banking to see if they’re offered there. Bank of America, Wells Fargo, and Orchard Bank(HSBC) all offer secured cards. Also, it wouldn’t hurt to add her to one of your oldest credit cards that’s in good standing as an authorized user. If the card had a high limt, but fairly low balance charged, with a perfect payment history that’s been opened for 3 years or more would be ideal. The activity from that account would enhance what she currently has, that’s an option.

    Going back to the secured card option, think of this as building credit with a savings account, becuase that’s exactly what you’re doing: using a savings account as a security deposit to get a line of credit. Usually what you deposit, will determine your credit line. For example you deposit $ 300, then $ 300 should be your limit. Now how you can make this work to your advantage would either be by adding to the deposit frequently to increase the limit, or making a substantial deposit that would be close to the maximum allowed. The reason s would be done is to have a high limit report on her credit to help boost her utilization (debt to income ratio), it also makes it look more responsible with a higher limit. Now, keep in mind that the money that’s in the deposit account is only going to be temporarily tied up. Usually after a year of keeping the balance manageable and paying considerably more than the minimum payment every month, the deposit is refunded and either the card converts to an unsecured card or you’ll receive an offer for a better card. If you’re able to get any of this to happen, she should very well have at least 3 credit cards reporting on her accounts with high limits possibly.

    Another way to increase her score would be to get an installment account either by financing appliances, furniture. Something small. She already has a student loan that’s helping, but It helps your score when you have a mixture of installment and revolving accounts to provide balance. For more information on this see Step 7 on the link I posted below.

    These are just a few pointers that may help out a lot, I also posted a step-by-step guide on how to build it up ever further!

    Good luck!

  13. Reply
    brady ewart
    February 14, 2011 at 7:30 pm

    The credit reporting agencies do not arbitrarily decide on your credit score. In fact every loan, mortgage or credit card you take is closely monitored by the financial institution that provides it. The way you tackle your debt, repayment and interest rates is tracked by the company and sent to the credit rating agencies to calculate your credit score. The software used to calculate your credit score is FICO (Fair Issacs Corporation) after the people who designed it. It is a fairly complicated piece of software that decides on your credit score based on established parameters. Read more about your FICO score at: http://www.credit-card-gallery.com/article/213,Your_Credit_report_5_myths_busted

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