Refinancing To Get A Lower Interest Rate

When mortgage rates drop to new lows as they have recently in 2015, some borrowers get their sights set on refinancing their home loans to take advantage of those lower rates. This is often true even in cases where a borrower has refinanced in the last year or so—those who pay attention to how much they could save with even lower interest rates sometimes try something known as serial refinancing to lower their mortgage payments even more.

With the right financial planning this serial refinance approach could be of help to borrowers who need extra cash to use for other purposes. Some multiple refinancers have saved between $150-$200 a month by getting into lower interest rates through smart refinancing of their mortgages. Your own results may vary—no two loans or transactions are the same—but the potential to save money through a refinancing loan with today’s low interest rates is attractive to many.

Some credit-score savvy borrowers want to know whether this type of refinance strategy has the potential to hurt your credit score?. It’s a valid question--does multiple refinancing have a negative impact on your ability to borrow in the future?

Not according to some. Consider a MSN Money article titled, “How refinancing affects your credit scores”. This article states that anyone uncertain about refinancing a home loan because of the impact on credit should “relax”. The  article includes this quote: "It will neither help nor hurt your score in the short term…"

That’s according to Anthony Sprauve, director of public relations for myFICO.com, who is quoted in the MSN Money post. "Any impact will be minimal and brief. The true impact will be how you manage the new mortgage over time."

The article does mention something to beware of when considering another refinancing loan--how shopping around for that loan could affect your FICO score in the short term. “Each time you apply for credit, that produces an ‘inquiry’ into your credit history.” Some sources say each of those inquiries could lower your credit score by five points “or less”. It’s something to remember when considering your next home loan refinance move.

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