Understanding Credit Scoring on Mortgage Refinancing

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Refinancing After Bankruptcy
Refinancing after a bankruptcy can seem like an especially difficult challenge, but it doesn't have to be. Six months after your bankruptcy has been finalized, you can find lenders willing to refinance your mortgage. In fact, refinancing your mortgage can help rebuild your credit to good standing in two year's time. The following steps will help you find the best refinance lender while helping you... Read refinance mortgage article



Mortgage Refinance - Is Your Credit Ready For A Mortgage
To help determine whether you're ready to take on a mortgage or not take a look at your finances. Two things that you really want to take a look at are your credit score and current debts. These two factors greatly determine how much home you can afford.

Credit Scores.

What determines a good credit score depends upon the scoring model and the lender. Some credit reporting com... Read refinance mortgage article



Understanding Credit Scoring on Mortgage Refinancing
For years, lenders have utilized "credit scoring" to determine whether or not an individual is a good credit risk. Credit scoring has recently become a hot topic, due in large part by the mortgage lending industry's willingness to use the process to evaluate one's likelihood of repaying home mortgage refinancing or second mortgage loans. Even insurance companies use credit scoring as part of their underwriting procedure when writing automobile and home insurance coverage.

Credit scoring is a system, based on a statistical program, which awards points for certain factors that help predict who is most likely to repay a debt, such as a mortgage refinancing or second mortgage loan. The total number of points, or score, is what lenders use to determine an individual's creditworthiness. A large random sample of customers is taken, and analyzed statistically to identify characteristics relating to credit risk. These factors are then given a weight based upon how strong a predictor they are of who would be a good credit risk.

Credit scoring models do vary from lender to lender, but most generally include the following factors:

1) Your current amount of debt as compared to your potential total available credit.

2) Payment history on current and previous accounts.

3) The length of your credit history.

4) The number of credit inquiries (each time a creditor pulls credit in response to your application).

5) The number of separate open accounts.

6) Collection actions including judgments, repossessions, foreclosures, and bankruptcies

Using the statistical program, lenders compare this information about you to the credit performance of other consumers with similar profiles. Therefore, it is usually more reliable than a subjective or judgmental decision, because it is based on real data and statistics. Although it may seem somewhat impersonal, when used properly, credit scoring can allow creditors to evaluate credit applications faster and more accurately than individuals, in an impartial and unbiased manner.

In addition, the home mortgage refinancing and second mortgage loan process has been shortened as a result of the speed in which mortgage lenders can now make decisions utilizing the credit score model.

Click here for more information on Mortgage Refinancing and Second Mortgage Solutions.

Bob Peckenpaugh is a professional mortgage planner with over 15 years lending and banking experience. His programs assist clients with increasing cash flow, reducing liabilities and building equity by integrating a client's mortgage decision with their overall financial plan. He is a manager with CFIC Home Mortgage providing both purchase and refinance transactions. Bob holds a B.S. in Marketing and Management and is Fair Credit Reporting Act certified. Click here for more information on Mortgage Refinancing and Second Mortgage Solutions.

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Refinancing - What You Must Consider

It is no secret that many people have been taking advantage of the recent record low interest rates to refinance their homes at more favorable rates. There are a number of excellent reasons for refinancing a home, but there are a number of important things to consider before taking the plunge.

People refinance their homes for many reasons, but chief among them of course is the desire for a lower interest rate and a lower monthly payment. In some cases the homeowner may even be able to shorten the length of the mortgage loan through a refinancing deal. People with a thirty year mortgage may be able to use today's lower interest rates to cut the term in half while still enjoying an affordable monthly payment.

Before you decide to refinance to lower your monthly payment or shorten the length of your loan, however, there are a number of things to consider. These considerations include:

-The interest rate is the most important consideration. It is important to remember that even a small difference in the interest rate can pay off in a short period of time. This is especially true since it is often possible to find a lender who is willing to waive certain routine charges associated with refinancing. Some banks and other lenders are willing to waive application fees, appraisal fees and legal fees, and important consideration, since these fees can easily add up to $1,500 or even $3,000.

-There is generally a price to pay, however, for this waiver of fees. In most cases, the lender who is willing to waive those fees will charge a somewhat higher interest rate than you could get elsewhere. It is up to you to run the numbers and determine if the higher interest rate is worth it.

-It is important also to consider how long you plan to stay in your home when making a refinance decision. Those homeowners who plan to stay in the home for at least three to five years may be able to justify paying points and closing costs in order to refinance the loan. Again, it is up to the homeowner to determine if the lower interest rate justifies the points and closing costs he or she will be required to pay.

-Another important consideration is whether to pay the points and closing costs up front or add them to the amount of the loan. Some homeowners who are strapped for cash prefer to add the closing costs and points to the loan, and if the interest rate is right the monthly payments can still be a lot lower. It is important to check the math and decide which approach works the best for you.

Brooke Sikula is a freelance writer based in Ventura, CA and writes on a wide range of topics from home improvement to credit repair and everything in between. She is a regular contributor to http://www.get-home-improvement.com and http://www.credit-card-faq.com

For more information on real estate and mortgage finance, check out http://www.loan-mortgage-auto.com


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Understanding Credit Scoring on Mortgage Refinancing ( mortgage refinance )
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