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January 12, 2021

Tagged Celebrity Real Estate, estate, Financial Wize, FinancialWize, Mortgage

Does Refinancing Hurt Your Credit?

Credit 101

9 min
1 year ago
2

Before you make any big financial decision, it’s crucial to learn how it may affect your credit score. If youâre looking to refinance, itâs natural to wonder if it might hurt your credit. Typically, your credit health will not be…

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The post Does Refinancing Hurt Your Credit? appeared first on MintLife Blog.

January 12, 2021

Tagged All, Auto, car loan, closing, Credit

Before you make any big financial decision, it’s crucial to learn how it may affect your credit score. If youâre looking to refinance, itâs natural to wonder if it might hurt your credit.

Typically, your credit health will not be strongly affected by refinancing, but the answer isnât always black and white. Whether youâre still considering your options or already made your choice, weâve outlined what you need to know about refinancing below.

What Is Refinancing?

Refinancing is defined by taking on a new loan to pay off the balance of your existing loan balance. How you approach a refinancing decision depends on whether itâs for a home, car, student loan, or personal loan. Since refinancing is essentially replacing an existing debt obligation with another debt obligation under different terms, itâs not a decision to take lightly.

If youâre worried about how refinancing will affect your credit health, remember that there are multiple factors that play into whether or not it hurts your credit score, but the top three factors are:

1) Having a Solid Credit Score

You wonât be in a strong position to negotiate refinancing terms without decent credit.

2) Earning Sufficient Income

If you canât prove that you can keep up with loan payments after refinancing, it wonât be possible.

3) Proving Sufficient Equity

Youâll also need to provide assurance that the payments will still be made if your income canât cover the cost. Itâs recommended that you should have at least a 20 percent equity in a property when refinancing a home.

criteria-for-being-able-to-refinance-successfully

How Does Refinancing Hurt Your Credit?

Refinancing might seem like a good option, but exactly how does refinancing hurt your credit? In short, refinancing may temporarily lower your credit score. As a reminder, the main loan-related factors that affect credit scores are credit inquiries and changes to loan balances and terms.

Credit Inquiries

Whenever you refinance, lenders run a hard credit inquiry to verify your credit score. Hard credit inquiries typically lower your credit scores by a few points. Try to avoid incurring several new inquiries by using smart rate shopping tactics. It also helps to get all your applications in during a 14â45 day window.

Keep in mind that credit inquiries made during a 14â45 day period could count as one inquiry when your scores are calculated, depending on the type of loan and its scoring model. Regardless, your credit wonât be permanently damaged because the impact of a hard inquiry on your credit decreases over time anyway.

Changes to Loan Balances and Terms

How much your credit score is impacted by changes to loan balances and terms depends on whether your refinanced loan is reported to the credit bureaus. Lenders may report it as the same loan with changes or as an entirely new loan with a new open date.

If your loan from refinancing is reported as a new loan, your credit score could be more prominently affected. This is because a new or recent open date usually means that it is a new credit obligation, therefore influencing the score more than if the terms of the existing loan are simply changed.

How Do Common Types of Refinancing Affect Your Credit?

Refinancing could help you pay off your loans quicker, which could actually improve your credit. However, there are multiple factors to keep in mind when refinancing different types of loans.

main-types-of-refinancing-that-can-affect-your-credit

Refinancing a Mortgage

Refinancing a mortgage has the biggest potential impact on your credit health, and it can definitely affect your FICO score. How can you prevent refinancing from hurting your credit too much? Try concentrating your credit inquiries when you shop mortgage rates to a 14â45 day window â this will help prevent multiple hard inquiries. Also, you can work with your lenders to avoid having them all run your credit, which could risk lowering your credit score.

If youâre unsure about when to refinance your mortgage, do your research to capitalize on the best timing. For example, refinancing your mortgage while rates are low could be a viable option for you â but it depends on your situation. Keep in mind that losing your record of paying an old mortgage on time could be harmful to your credit score. A cash-out refinance could be detrimental, too.

Refinancing an Auto Loan

As you figure out if refinancing your auto loan is worth it, be sure to do your due diligence. When refinancing an auto loan, youâre taking out a second loan to pay off your existing car debt. In some cases, refinancing a car loan could be a wise move that could reduce your interest rate or monthly payments. For example, if youâre dealing with an upside-down auto loan, you might consider refinancing.

However, there are many factors to consider before making an auto loan refinancing decision. If the loan with a lower monthly payment has a longer term agreement, will you be comfortable with that? After all, the longer it takes to pay off your car, the more likely it is to depreciate in value.

Refinancing Student Loans

When it comes to student loan refinancing, a lower interest rate could lead to major savings. Whether youâve built up your own strong credit history or benefit from a cosigner, refinancing can be rewarding.

Usually, you can refinance both your federal and private student loans. Generally speaking, refinancing your student loans shouldnât be detrimental in the grand scheme of your financial future. However, be aware that refinancing from a federal loan to a private loan will have an impact on the repayment options available to you. Since federal loans can offer significantly better repayment options than private loans, keep that in mind before making your decision.

Pros	Cons
If the cost of borrowing is low, securing a lower interest rate is possible	Credit scores can drop due to credit checks from lenders
If your credit score greatly improved, you can refinance to get a better rate	Credit history can be negatively affected by closing a previous loan to refinance
Refinancing a loan can help you lower expenses in both the short term and long term	Refinancing can involve fees, so be sure to do a cost-benefit analysis

How to Prevent Refinancing from Hurting Your Credit

By planning ahead, you can put yourself in a position to not let refinancing negatively affect your credit and overall financial health.

Try to prepare by reading your credit reports closely, making sure there are no errors that could keep your credit application from being approved at the best possible rate. Stay one step ahead of any errors so you still have time to dispute them. As long as you take preventative measures in the refinancing process to save yourself time and money, you shouldnât find yourself struggling with the refinancing.

If refinancing makes sense for your situation, you shouldnât be concerned about it hurting your credit. It might not be the most ideal situation, but itâs extremely common and typically relatively easy for your credit score to bounce back.

If you notice that your new loan from refinancing causes alarming changes when you check your credit score, be sure to reach out to your creditor or consider filing a dispute. As long as youâre prioritizing your overall financial health through smart decision making and budgeting, refinancing shouldnât adversely hurt your credit in the long run.

The post Does Refinancing Hurt Your Credit? appeared first on MintLife Blog.

Source: mint.intuit.com

Fannie Mae and Freddie Mac Mortgage Refinances Just Got More Expensive

1 min
1 year ago

Way to rain on our parade, Fannie Mae and Freddie Mac. Just when mortgage rates were hitting record lows, the pair decided to add a new fee to mortgage refinances in light of the ongoing pandemic. Simply put, they expect more losses related to a higher rate of loan defaults, and are adjusting their pricing [&hellip

The post Fannie Mae and Freddie Mac Mortgage Refinances Just Got More Expensive first appeared on The Truth About Mortgage.

January 12, 2021

Tagged Financial Wize, FinancialWize, Mortgage, Mortgage News, Mortgage Rates

15-Year Fixed Mortgage Rates Just Hit Record Lows: Should You Consider One?

1 min
1 year ago

While 30-year fixed mortgage rates tend to steal all the headlines, 15-year fixed mortgage rates quietly reached record lows this week as well, per Freddie Macâs weekly survey. This morning, Freddie announced that the 30-year fixed fell to a new record low 2.65%, down from 2.67% last week. That was the first record low of [&hellip

The post 15-Year Fixed Mortgage Rates Just Hit Record Lows: Should You Consider One? first appeared on The Truth About Mortgage.

January 12, 2021

Tagged All, Financial Wize, FinancialWize, Mortgage, Mortgage News

National Association of Realtors Says Home Prices Are Rising Too Fast

Money Basics

Mortgage News

1 min
1 year ago

Itâs good to be a homeowner these days. After all, home prices are rising at an incredible pace, and have been for nearly a decade now since bottoming out. On top of that, many of todayâs homeowners hold fixed-rate mortgages with ultra-low mortgage rates, making it very affordable to own rather than rent. Unfortunately, the [&hellip

The post National Association of Realtors Says Home Prices Are Rising Too Fast first appeared on The Truth About Mortgage.

January 12, 2021

Tagged All, Financial Wize, FinancialWize, Home, Mortgage

Watch Your Wallet: 7 Hidden Costs of Self-Isolating at Home During Coronavirus

Budgeting

Home

Investment Properties

Money Management

8 min
1 year ago
4

As some expenses decrease during self-isolation, others can creep up. To brace yourself and your budget, keep an eye on these costs while in quarantine.

The post Watch Your Wallet: 7 Hidden Costs of Self-Isolating at Home During Coronavirus appeared first on Real Estate News & Insights | realtor.comÂ®.

January 12, 2021

Tagged All, budget, Budgeting, Buy, Buying

How long does it take to buy a house? The answer is: it depends. You can buy a house in a matter of weeks or it can take you anywhere from 4 to 6 months. The question is how ready are you? It can take a long time, and that’s just learning about various mortgage …

Continue reading “How Long Does It Take To Buy A House?”

The post How Long Does It Take To Buy A House? appeared first on GrowthRapidly.

January 11, 2021

Tagged Buy, Buying, Buying a house, Credit, credit score

Why Are Refinance Rates Higher?

1 min
1 year ago

Mortgage Q&A: âWhy are refinance rates higher?â If youâve been comparing mortgage rates lately in an effort to save some money on your home loan, you may have noticed that refinance rates are higher than purchase loan rates. This seems to be the case for a lot of big banks out there, including Chase, Citi, [&hellip

The post Why Are Refinance Rates Higher? first appeared on The Truth About Mortgage.

January 10, 2021

Tagged Financial Wize, FinancialWize, Mortgage Rates, Mortgage Tips, Refinance

An Alternative to Paying Mortgage Points

1 min
1 year ago

If and when you take out a mortgage, youâll be faced with an important choice. To pay or not pay mortgage points. In short, those who pay points should hypothetically secure a lower interest rate than those who do not pay points, all else being equal. Thatâs because mortgage points, at least the ones that [&hellip

The post An Alternative to Paying Mortgage Points first appeared on The Truth About Mortgage.

January 10, 2021

Tagged All, Financial Wize, FinancialWize, Mortgage Rates, Mortgage Tips

21 Mortgage Questions You Should Know the Answer To

1 min
1 year ago

I thought it would be helpful to create a post that answers a lot of top “mortgage questions” that consumers tend to ask in one convenient place. You should know the answers to all of these questions if you’re serious about getting a mortgage and ready to buy a home. Additionally, you might be better [&hellip

The post 21 Mortgage Questions You Should Know the Answer To first appeared on The Truth About Mortgage.

January 10, 2021

Tagged All, Buy, Financial Wize, FinancialWize, Mortgage Rates

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Does Refinancing Hurt Your Credit?

Fannie Mae and Freddie Mac Mortgage Refinances Just Got More Expensive

15-Year Fixed Mortgage Rates Just Hit Record Lows: Should You Consider One?

National Association of Realtors Says Home Prices Are Rising Too Fast

Watch Your Wallet: 7 Hidden Costs of Self-Isolating at Home During Coronavirus

How Long Does It Take To Buy A House?

Why Are Refinance Rates Higher?

An Alternative to Paying Mortgage Points

21 Mortgage Questions You Should Know the Answer To