Secrets to Refinancing

Want to refinance your home loan, but you're afraid you might not qualify for the best terms? Perhaps you think your credit score isn't good enough, or the equity in your house is too low, or your debt ratio is out of whack. Well, although all of that could be true, you just won't know wallowing in the shadows. Chances are you might have a better chance than you think if you understand a few of the secrets to refinancing.

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Know Your Credit Score

"I had a woman tell me her credit was 'terrible' and it turned out she had a 741 mid score, qualifying her for the best terms," says Jay Dacey, a mortgage planner in the Twin Cities.

Many people guess at their credit score rather than take the time to discover it. A credit score, generated from data on a credit report that details items such as a person's history of payment punctuality, the total amount of available credit, the total amount and type of debt, the number of open and active accounts, and the longevity of relationships with creditors.

The major consumer characteristic contributing to a VantageScore credit score is one's payment history. Since it makes up approximately 32 percent of the score, it is beneficial to refinancing to make payments on outstanding debts to avoid a negative ding on your credit report.