The Money Coach
  • About
    • Meet Lynnette
    • Media Kit
  • Get Help
    • Money Coach University™
    • Books
    • Financial Coaching
    • Speaking
    • The Money Coach Recommends™
  • Contact
  • Building Wealth
  • Investing
  • Credit Scores
  • Student Loans
  • Paying for College
  • Saving Money
  • Real Estate
  • Credit Card Debt
No Result
View All Result
The Money Coach
  • About
    • Meet Lynnette
    • Media Kit
  • Get Help
    • Money Coach University™
    • Books
    • Financial Coaching
    • Speaking
    • The Money Coach Recommends™
  • Contact
No Result
View All Result
The Money Coach
No Result
View All Result

My Credit Score is 610. Can I Refinance into a Fixed Rate Loan with My Score?

Lynnette Khalfani-Cox, The Money Coach by Lynnette Khalfani-Cox, The Money Coach
in Real Estate
Reading Time: 2 mins read
refinance
14
SHARES
228
VIEWS
Share on FacebookShare on Twitter

Q: I have an arm at 6.5% that adjusts in august. My credit score is 610. Can I refinance into a fixed rate loan with my score or should I consider another arm?
A: As of January 2010, fixed-rated mortgages dropped to about 5%, a very attractive rate for homeowners thinking about refinancing.

However, those very low rates are going to the banks’ very best customers: those with pristine credit (i.e. FICO scores above 740) and individuals with at least 20% equity in their homes.

For everyone else, expect to pay a higher rate. Since you said you do not plan to be in the house much longer (3 years at most), an ARM may not be a bad move.

According to BankRate.com, 5/1 Adjustable Rate Mortgages are currently averaging 4.36% nationwide, compared with a rate of 5.14% for 30-year fixed rate mortgages nationwide.

Calculate Your Break Even Point

Use the mortgage-refinance calculator on Bankrate’s site (http://www.BankRate.com) to run a couple of different scenarios. Also, talk to a mortgage broker or to your existing lender about what rates and terms you’d likely qualify for in the current market.

They will be able to tell you your “break even point.” That’s the number of months it would take you to recoup the cost associated with refinancing your home.

For example, if your refinance costs $9,000 to get done, but it saves you $200 a month (because you got, say, a 5.25% interest rate), then your break even point would be 45 months – or 3 years and 9 months.

As long as you live in the house that long, it will have been worth it for you to refinance. If you live in the house for a shorter period of time, then you basically lost money on the refi.

Consider FHA Alternatives

If you don’t like what you see in the breakeven analysis, and you simply want the security of a fixed rate loan – which is the better deal for most people right now – then think about getting a government insured mortgage.

Among conventional lenders, I suspect that your 610 credit score would put you in the bottom tier of customers, if you can get approved at all.

But that wouldn’t necessarily be the case with a government-backed FHA loan, which would certainly be a mortgage option to consider.

FHA loans are based on your debt-to-income ratio, and not your credit score. But a lot of lenders who do FHA loans are imposing their own credit score requirements for these loans, even though the government doesn’t. If you don’t meet their minimum credit score cutoff, lenders (and soon the government) will charge you a higher rate.

See the Housing and Urban Development’s website (http://www.hud.gov) for more information on FHA loans.

Tags: home refinancerefinance
Previous Post

How To Avoid a Second Bankruptcy

Next Post

Impact of Bankruptcy on Your Spouse

Related Articles

buy a house
Covid-19

Should I Still Buy a Home During the Coronavirus Pandemic?

by Lynnette Khalfani-Cox, The Money Coach
Couple celebrates after buying their first home because they followed a home buying guide
Real Estate

3 Home Buying Hacks to Buy a House in 2020

by Guest Blogger
AskTheMoneyCoach- HELOC
Loans

Is a HELOC Right for You? Pros, Cons, and Considerations to Make

by Guest Blogger
homeownership
Real Estate

Hidden Costs of Owning a Home

by Lynnette Khalfani-Cox, The Money Coach
Lynnette Khalfani-Cox - Homeownership Smarts
Real Estate

Are You Ready for Homeownership?

by Lynnette Khalfani-Cox, The Money Coach
tiny home
Real Estate

Should You Downsize to a Tiny Home?

by Lynnette Khalfani-Cox, The Money Coach
selling your home
Real Estate

5 Tips to Save Money When Selling Your Home

by Guest Blogger
mortgage terms
Real Estate

5 Confusing Mortgage Terms Explained

by Lynnette Khalfani-Cox, The Money Coach
Lynnette Khalfani-Cox
Real Estate

Video: Risk of Buying Real Estate for a Tax Purpose

by Lynnette Khalfani-Cox, The Money Coach
Next Post
Impact of Bankruptcy on Your Spouse

Impact of Bankruptcy on Your Spouse

About

Lynnette Khalfani-Cox, The Money Coach®, is a personal finance expert, speaker, and author of 15 money-management books, including the New York Times bestseller Zero Debt: The Ultimate Guide to Financial Freedom.

Lynnette has been seen on more than 1,000 TV segments nationwide, including television appearances on Oprah, Dr. Phil, The Dr. Oz Show, The Steve Harvey Show, Good Morning America, The TODAY Show and many more.

Quick Links

  • Money Coach University
  • Lynnette's Personal Site
  • The Money Coach Corporate Site
  • Video Portfolio
  • Privacy Policy

All information on this blog is for educational purposes only. Lynnette Khalfani-Cox, The Money Coach, is not a certified financial planner, registered investment adviser, or attorney. If you need specialty financial, investment or legal advice, please consult the appropriate professional. Advertising Disclosure: This site may accept advertising, affiliate payments or other forms of compensation from companies mentioned in articles. This compensation may impact how and where products and companies appear on this site. AskTheMoneyCoach™ and Lynnette Khalfani-Cox, The Money Coach® are trademarks of TheMoneyCoach.net, LLC.

©2009-2022 TheMoneyCoach.net, LLC. All Rights Reserved.

No Result
View All Result
  • Meet Lynnette
  • Money Coach University™
  • Books
  • Financial Coaching
  • Speaking
  • The Money Coach Recommends™
  • Media Kit
  • Contact

©2009-2021 TheMoneyCoach.net, LLC. All Rights Reserved.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Add New Playlist