Interest rates are at historic lows.  More homeowners than ever before are considering refinancing.  Think about it interest rates in 1998 for a 30 year fixed mortgage were on average about seven percent; today interest rates sit at an average of between three and three and a half percent.  That is a huge savings for homeowners not just each month but over the entire course of owning the home.  Refinancing allows homeowners to lower their monthly payment which can allow many to use the extra money for upgrades to the home that increase the value of the home overall.  One problem that plagues some homeowners is less than stellar credit.

Homeowners with poor credit ratings can have a difficult time refinancing their current mortgage.  Often this goes unrecognized until you begin the process of refinancing.  Homeowners often think they are basically refinancing the same mortgage amount just for a lesser interest rate so why does it matter if their current credit isn’t up to par.  For them it is the same mortgage just at a lower interest rate.  This however is not how mortgage lenders see it.

Credit scores are used to determine an individual’s ability to pay debt back in full.  A low credit score gives lenders the impression that you are taking on too much debt for the income that you have coming in.  The snap shot of your current financial situation puts you at a higher risk then when you financed your original mortgage.  The scores of an individual’s credit can range between three hundred, at its lowest, to eight hundred and fifty, at its highest.

Homeowners will pay lower interest rates with higher credit scores.  With less than stellar credit it’s important to make sure that the savings you are looking for with the lower interest rate will really exist for you.  You need to consider the actual rate you will be given.  A homeowner with an eight hundred and fifty credit rating will receive a lower interest rate than those with poor credit.

Refinancing doesn’t always make sense for homeowners that have poor credit after they take into consideration an extended loan term, closing costs, loan fees, and more.  When combining these concerns it maybe that refinancing actually increase the overall cost of your mortgage even with the lower interest rate.

When your credit is less than perfect it is especially important to work with a mortgage broker to find the mortgage refinancing option that works best for your situation.

Cross Country Mortgage in Brighton, Michigan provide mortgage services for clients including new home loans, refinancing, reversed mortgages, new purchase home mortgages and home equity loans to the entire Livingston County area including Brighton, Howell and Livingston County. Cross Country Mortgage Brighton, MI at