Repeat refinance could ding credit
Serial refinancing can hurt a credit score and prove costly.
By Don Taylor of Bankrate.com
© Ryan McVay/Getty Images
Question: I recently refinanced my home mortgage for 15 years at 4.5% with zero points. I now see that the 15-year refinance rate is 2.8% and seems to be dropping. Would refinancing again, within three months of the first refinance, affect my credit score?
Answer: The loan application will trigger a "hard pull," or credit inquiry, on your credit report. Credit inquiries initiated by the consumer stay on a credit report for two years, but only affect the credit score in the first year. (Bing: Perfect credit score)
You can comparison-shop mortgage lenders in a relatively short (two week) time period, and that will count as only one inquiry on your credit score because it's clear you're shopping for a mortgage.
I'd worry less about the credit score and more about the cost of serial refinancings. The reason you want a good credit score is to be able to take advantage of a great rate. Your score, all else held constant, will bounce back from any short-term dip caused by the refinancing.
- On our blog, 'Listed': 10% of mortgage mods reduced principal
Saving 1.7% isn't inconsequential, but you'll pay several thousand dollars in closing costs to capture that lower interest rate. The closing costs on the existing mortgage are a sunk cost and aren't relevant to the refinancing analysis.
A mortgage calculator can help you estimate the monthly payment and figure out if refinancing makes sense depending on how long you plan to be in the house.
There can't be much room left for improvement for fixed-rate mortgages, despite the possibility that rates will trend a little lower if the Federal Reserve starts buying long-term Treasury securities in a much-discussed quantitative easing program.
MSN needs your opinion!
We need your help!Please help MSN Real Estate serve you better by taking this short survey.Close X
FIND YOUR DREAM HOME OR APARTMENT
Date 7/31/14 3:51
Tooltip Information:Housing Market Gets Boost From U.S. VetsVideo by:Description: July 31 (Bloomberg) -- America’s fragile housing recovery is getting a boost from military buyers using VA mortgages as the U.S. draws down troops after more than a decade of combat in Iraq and Afghanistan. Jody Shenn has more on "Bottom Line." (Source: Bloomberg)Rating: 4Views: 1026
Date 7/24/14 2:07
Tooltip Information:Why Zillow Would Want to Buy Rival Site TruliaVideo by:Description: July 24 (Bloomberg) -- Zillow is seeking to acquire rival Trulia, people with knowledge of the matter said, in a move to combine the two most-visited U.S. real estate websites. Shares of both companies jumped. Jeffrey McCracken reports on "Bottom Line." (Source: Bloomberg)Rating: 4Views: 190
Date 7/31/14 1:07
Tooltip Information:Michael Jackson's Neverland Estate Now Up for SaleVideo by:Description: July 31 (Bloomberg) -- Neverland Ranch, the Los Olivos, California, property where the late entertainer Michael Jackson lived, may soon get a new owner. Scarlet Fu reports on “Bloomberg Surveillance.” (Source: Bloomberg)Rating: 4Views: 55865
Date 7/24/14 1:52
Tooltip Information:Airbnb user: Renters won't leave houseVideo by:Description: Cory Tschogl says that two men are refusing to leave her rented Airbnb house after their rental agreement expired.Rating: 4Views: 44