Home line credit — refi?
I have a line of credit around 7% . which I have borrowed the full amount. With fed reducing the rate this weekend to near zero. Can the bank refinance me now at the new rate that they are borrowing from the Fed’s now? Also would this effect my credit rating if I change? I’m looking to refinance my mortgage 4.25% mortgage rate once I can increase my credit score around 650 / FICO score 677. If you can, I appreciate you answering my questions.
Terry Says
As long as you are currently employed, and have decent credit (which you do) this is the PERFECT time to refinance your mortgage. For reasons explained in my latest column, rates on 30 year loans remain stubbornly above 3%, despite the Fed’s latest cut.
But this is definitely the moment to refinance your home equity loan into a new mortgage at a lower rate. Just be aware that technically, interest on the portion of your loan that was NOT used for purchase or to improve the property (likely your home equity loan unless you used it to remodel) — that portion of the interest will not be tax-deductible.
Doing a refi will make your situation better, and therefore won’t be a negative on your credit report. It may even increase your score.
