Minimum Credit Score to Refinance Your Home or Automobile

Required Minimum Credit Score to Secure a Refinance Loan

There is no simple answer to what kind of credit score you need to secure a refinance loan. Obviously the higher a credit score the better chance but it also depends largely on the kind of refinance loan you are a seeking. While there are still programs available for people with scores below 580, they are becoming rarer and rarer. The minimum credit score you will need for a home refinance loan from Freddie Mac and Fannie Mae is 620.

Remember though, your credit score is only one part of the equation. Every refinance loan lender wants to see three things from any potential customer:

Having these three things in addition to a higher credit score will certainly bolster your chances of getting a refinance loan. Still, if you are like 30% of Americans with bad credit and you need to get a refinance loan, you should read our section on How to Secure a Loan with Bad Credit.

How to Figure Out Whether to Refinance Your Home

For some homeowners this is a very simple question to answer. If you are stuck in a double-digit mortgage while rates are currently below 8-percent, there’s no question you will save a lot of money over the long run. Even if you refinanced only a couple of years ago, getting a refinance loan probably makes very good sense if interest rates have fallen even a point or two.

Other homeowners may find this question not so easy to answer. In such a case, you may want to consider some other factors to help weigh your decision.

Mortgage lenders must adhere to strict federal and state guidelines dictating the percentage of the current home value they can lend. In general, you can refinance if your home is worth 10-percent more than the new loan amount.

Refinancing Your Automobile Loan

Few people know it but auto loan refinancing is one of the best kept secrets for saving money. Most people don’t even think of refinancing their auto loan. When you refinance your auto loan, you pay off your current loan from a different lender with a lower annual percentage rate (APR). This means refinancing your auto loan drops your monthly auto loan payment lower, dropping your interest rate, and allows you pay off the auto loan balance even quicker.

Auto loan refinancing is becoming more and more popular as interest rates drop. Bear in mind, your current lender is unlikely to refinance its own loan so you will have to find a new lender. Also, unlike refinancing your home you don’t need to get an appraisal to refinance your auto loan. Refinancing you auto loan is based on how much you have remaining on your loan instead of the equity in your home.

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