Mortgage Refinance and the Credit Score Levels
There’s a funny thing about today’s mortgage refinance lenders, and that is they are putting a whole lot more weight on a borrower’s credit score than ever before. Gone are the days of getting a home mortgage because you knew the banker and shook hands on the deal. Today, you will need a minimum of at least a 620 mid fico score to qualify for a mortgage loan, for both an fha refinance and a conventional refinance. That is a huge move up in credit score as compared to just a couple years ago when a refinancing homeowner could finance up to 90 percent of the appraised value of their home and still get a decent mortgage rate.
It also used to be that a refinancing borrower could gain a greater number of loan program options if they had an excellent credit score. They could get low-doc, no-doc, and stated income mortgage loan products. Today, it is really only fully documented income loans that are on the market. Although, excellent credit scores still make your refinance mortgage calculator spit out lower monthly payment amounts as those with scores above the 720 mid fico range receive much better qualified interest rates.
For refinancing homeowners that have lower credit scores in the 620 to 700 range, the fha mortgage refinance may be the best option if you are refinancing over 80 percent of the appraised value of your home. This option should result in better qualified mortgage rates than the conventional counterpart and the private mortgage insurance (PMI) will be up to 50 percent less than conventional loans.
