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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 2608
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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I have a credit rating of about 720 which took a big hit due

Customer Question

I have a credit rating of about 720 which took a big hit due to a foreclosure in 2013. I have a parent plus loan that I would like to refinance to get interest rate and payments down. I will also be relocating in the next few months to a different state.
Should I wait to refinance the parent plus loan until after qualifying for a new mortgage or should I refinance now? What effect will refinancing have on my credit score? And what effect will the resulting change in payments have on my qualifying for a new
mortgage or lease?
Submitted: 2 years ago.
Category: Finance
Expert:  CFEPro789 replied 2 years ago.
Credit score calculation formulas are proprietary, so nobody knows exactly what effects them when it gets down to granular questions like this. However, a 720 is still a good credit score and typically anytime you pay off a debt (even if its through a refi and then you take out the same debt again), it is favorable to your score. In your case, you woudn't be adding any new debt so I see no issue with the refi now. If the payments are lower, they will increase the amount you can borrow through the mortgage bc your debt payment to income ratio will improve. My advice is to refi now and don't wait if you have an opportunity to lower your payments, the student loan refi won't have any negative impact on your mortgage, if anything it will help.
Customer: replied 2 years ago.
Okay, thank you. That is basically what I was hoping to hear.