A home mortgage refinance is an expensive endeavor. According to the Federal Reserve, the average home refinance in the United States costs the borrower between 3 and 6 percent of the loan amount in closing costs. The closing costs can quickly add up to thousands of dollars, depending on the value of the loan amount. This makes a home refinance a serious financial decision.

Qualifications

In order to qualify for a home mortgage refinance, a borrower must meet certain preset requirements. These requirements vary based on the mortgage type chosen, but some basic qualifications are similar across the board. The minimum credit score for most traditional mortgage products is 620, but some go as low as 580. The higher the credit score, the lower the interest rate. It is in the borrower’s best interest to work toward the highest possible credit score prior to making a home mortgage application. A borrower should check his credit report for errors and work to remove any prior to applying for a mortgage. Another quick way to improve a credit score is to pay down all revolving lines of credit, such as credit cards, down to less than 30 percent of their limit. This quickly lowers credit utilization and raises a credit score.

Considerations