Refinance Mortgage Rates Are Not Just Determined By Credit Score Alone

Using a home mortgage refinance is a excellent way to get money to fund a home improvement project, send your kids to college or just get a lower monthly payment. When refinancing many homeowners often wonder if they will qualify for the low refinance mortgage rates they hear advertised and see in the local newspaper.

When you apply for a home mortgage the lender will collect your financial information and pull your credit. Your credit score will be a major determining factor in what refinance mortgage rates are offered to you as a borrower, but it they are not the only factor. Your lender will be looking at numerous things to determine your eligibility for a loan. These will mainly include Debt To Income Ratios, type of loan documentation, Loan to value of the property, mortgage payment history and your assets.

Today almost all conforming loan decisions are made through computerized automated systems so having a mortgage lender that knows these systems well will help you qualify for your home loan, even with a lower credit score. The computer underwriting systems will look at the overall borrower and loan profile, so having a lower credit score but a low loan to value and debt ratios will more then likely allow your to qualify for low refinance mortgage rates while in comparison someone with a 720 credit score but a high debt ratio and looking for 95% of their properties value may get declined for a low rate mortgage because of a perceived high risk factor..

Although credit scores are a large factor in determining refinance mortgage rates they are not the only piece of the puzzle. So when it comes time to refinance make sure to you have a good mortgage lender to assist you in the process.

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Your Mortgage Refinance Rate Is Determined By Many Factors

The majority of people who refinance their mortgage are doing so for one of two reasons. Either to get a lower interest rate or consolidate debt. Regardless of the reason why they are refinancing borrowers want the best mortgage refinance rate that they qualify for. Although the radio and newspapers are filled with ads for low mortgage rates how do you know if you are actually going to qualify for them?

In most cases if your mortgage payments have never been 30 days late and you are using under 90% of your home equity you will have a good chance to qualify for a low mortgage rate. However mortgage history is not the only factor in determining your mortgage refinance rate. Your consumer credit history is also going to play a role in your loan rate as will your Debt To To income Ratio.

Most conforming loans will be denied if the borrower has numerous consumer credit late payments on their credit record. This means that for every 30 day late payment to your credit cards that is recorded on your credit report your chances for a low interest rate decrease substantially.

Your debt to income ratio is also another very crucial factor in getting your loan approved for low conforming rates. Your debt to income is basically all of your bills including credit card, department store card, auto loans and mortgage added up and divided by your gross pretax income. An acceptable number is around 42% but some lenders will allow up to 50% with good cash reserves in a bank account or retirement account.

Although there are many more factors in determining your rate these are some of the major ones. But your best chances for the best rate come when you shop around and compare offers from at least three reputable mortgage companies.

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