Mortgage Cannot be Given When a Credit Score is Lower than 380

Reader Question: I am trying to refinance my home. My credit score is 640 and my husband's is 530. We were told that some law just passed 12/16/08 that a mortgage cannot be given to someone with a credit score lower that 380. Is this true?

I have not heard of that particular law. But even if it does exist, it would seem to be irrelevant to you since your credit scores are above 380.

Regardless of what the law says, I can't see somebody with a credit score below 380 getting approved for a mortgage loan today. No mortgage lender in their right mind would lend money to somebody who is that bad off financially. In fact, I would go so far as saying that anyone with a score below 600 is going to have trouble getting a home loan in this economy.

There are many state laws that prohibit lenders from giving out refinance loans when it doesn't benefit the homeowner. Such laws are designed to protect homeowners. If the refinance loan will cost the borrower more than they end up saving in the long run, the lender cannot proceed.

Again, this varies from state to state. So you'll have to do some research and find out where your state stands on the issue of mortgage refinance laws. You can probably find some pertinent information by doing a Google search by "mortgage refinance laws" followed by your state name.