Refinance Mortgage Rates - Your FICO Score

The FICO Score is the cornerstone of most traditional lending decisions. It is used by almost all the major banks and most the credit services.
Your FICO Score does not reflect the following:

• race
• color
• religion
• national origin
• sex
• marital status
• whether you are receiving public assistance
• whether you are part of the equal opportunity lending participants

Your FICO Score is bought from the three major credit services by the banks, mortgage companies and credit service companies. The range of FICO Scores by company is

• Equifax............300-850
• Experian..........330-830
• TransUnion.....150-934

FICO Scores are calculated as follows:

• Payment history.................................35%
• How much you owe............................30%
• Length of credit history.....................15%
• New credit...........................................10%
• Types of credit used...........................10%

If your FICO Score is too low, then some type of lending institutions that will not offer you a loan. The refinance mortgage interest rate offered by the interested lending institutions will depend on your FICO Score.

Here are some of the factors which affect your FICO Score:

• credit cards at the maximum limit
• a history of only making minimum payments per month
• a large number of recent credit score requests.
• too much new credit assumed
• too little credit history

Here is the effect of FICO Scores. First the median score is 723. If you had a score in the range of 760 to 850 then you would be eligible for a refinance mortgage interest rate of 6.06%. But if your score was in the range of 620 - 639, then the rate would be 7.65%. This example is given not for the concrete numbers, there are just for example, but to illustrate the enormous effect that FICO scores have on interest rates.

Refinance Mortgage Information

Most Americans have one thing in common. The largest financial transaction of their lives will be the purchase of the family home. When interest rates are stable, then refinancing the first mortgage on your home is not a popular topic, but in recent decades the variation in interest rates has become a subject of great interest.

To demonstrate the impact of the interest rate on a typical family, consider these monthly mortgage payments at varying interest rates on a 30 year fixed rate, original amount of $200,000 mortgage:
Interest Rate Monthly Payment
4% $ 790.24
5% $1073.64
6% $1199.10
7% $1330.60
8% $1467.53
9% $1609.25
10% $1755.14
Everything else is constant; that is an average of $133 per month for every one percentage point change in the mortgage rate, that is $1596 per year and $47880 per 30 years. Interest rates are very important.

It is just arithematic to assess the effect of refinancing as long as you have all the factors.

• lender source fee
• appraisal fee
• application fee
• lawyers fee
• recording fee
• points
• other closing costs

Then considerations on your part

• cash out at closing required to consolidate other debt
• cash out at closing required to finance renovations
• cash out at closing for special purchase
• current credit history
• current value of the home, evaluation or devaluation
• lifestyle: retiring, both working, one retiring, kids gone, new kids etc.

When you look at that list you might wonder how anyone refinances. The simple answer is to pay no fees. Find a broker who wants to do business not dictate terms.

Additional posts will discuss more about refinancing mortgage rates: what is important and what is not, what you can affect and what you cannot.