What Credit Score is Needed to Refinance a Mortgage Loan?

What credit score do I need to refinance my mortgage loan? This is one of the most common questions among homeowners who are thinking about refinancing. And with the attractively low interest rates we are seeing right now, there are a lot of homeowners in this situation. So, what score is needed to refinance your home? Let's take a look.

• The first thing you need to realize is that the credit score is only part of the picture. Lenders will also require you to have a certain amount of equity in your home, as well as a manageable level of debt.
• There is no way to answer this credit question across the board, because different lenders have different qualification standards. With that being said, you'll probably need a credit score of 750 or higher if you want to refinance your mortgage in the current economy.
• A lot of the information online relating to this topic is outdated and inaccurate. Most information published before 2008 is no longer relevant, because we have experienced a mortgage crisis and economic recession since then. So consider the date of publication when reading about mortgage refinance online.
  
• Most lenders today will require you to have at least 20% equity, in addition to having a good credit score. If you don't have enough equity, you might want to look into the government refinancing programs that were launched in 2009.
• If you apply for refinancing and get turned down because of your credit score, you should focus your energy on improving the score. Here is the fastest way to do this.
• Before you decide to refinance your mortgage loan, you need to find out if it makes sense to do so. In particular, you need to find out if the money you save in lower interest makes up for the money you pay in closing costs. (Learn more about the average cost of a refi.)
  

If you have already checked your credit, and you feel you have the score needed to refinance your mortgage (something north of 750), then you should go ahead and get some refinancing quotes from lenders. Once you do that, you'll be able to determine whether or not a refi makes sense. To do this, you would calculate your savings (with the lower interest rate) over the life of the new loan.

Related Articles:

The Refinancing Process Explained
If you have never refinanced a home before, I strongly encourage you to read this article. It explains how the process works and give you an idea of what to expect.

What to Know About Refinance Rates
If you have the credit score needed for refinancing, and you get approved for the loan, you still need to determine if it's a smart move to make. This article explains the importance of the interest rate on refi loans, and how would you use it to determine your break-even point.