I am considering a home loan modification to reduce my interest rate (and thus my payment), but I was told by the mortgage company it has a negative affect on one’s credit score, but they couldn’t give me details.
I don’t want to refinance as I probably won’t remain in the house long enough to cover the closing costs.
My interest rate, while fixed, is high (7.5%). My credit score is good (740)
For anyone who has done this or is in the industry; any information is appreciated.
I am not behind at all on my payments, and not likely to be. I just feel 7.5% is way too high in today’s environment and I think I’m paying too much but don’t want the expense of a refi.
I posted this once before and only got 1 answer, so I’d like to get at least a couple of perspectives.
Thanks
It won’t hurt your credit score because you are not actually borrowing any money, you are just refinancing. In some cases it may actually help you credit score. Example your first loan was for 200K, you’ve paid off 50K, your new loan will be for 150K, that means your loan amount is smaller, and better for your credit. Also it will show on yor credit score that you paid off a loan. I just refinanced with a no closing cost loan( you pay a higher APR, but you will not pay any closing cost. ) I am paying 6 1/4, it’s probably even lower now. The fed is supposed to lower it again, so I would wait a month or so to see what happens,
depends on who your getting it with it could bring your credit score down.
References :
It never looks good to have a lot of outstanding debt on facilities, especially new ones, and for high amounts.
Going over a credit bureau and seeing a recently opened 50K Loan (most renovation budgets are around that area) opened 2 months ago that clients have just started paying down … is just one extra obligation.
Now if everything else is in line like your debt servicing ratio – so you can afford it – then it really doesn’t matter. Even better with good repay history.
References :
It won’t hurt your credit score because you are not actually borrowing any money, you are just refinancing. In some cases it may actually help you credit score. Example your first loan was for 200K, you’ve paid off 50K, your new loan will be for 150K, that means your loan amount is smaller, and better for your credit. Also it will show on yor credit score that you paid off a loan. I just refinanced with a no closing cost loan( you pay a higher APR, but you will not pay any closing cost. ) I am paying 6 1/4, it’s probably even lower now. The fed is supposed to lower it again, so I would wait a month or so to see what happens,
References :
I’ll star your Q so Beverly will see it, she’s a loan agent
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