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Beef Up Credit Before Refinancing Detroit Home

By Allison E. Beatty
Local Lender Columnist
Dec 6, 2006
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If you're planning to refinance your Detroit home, take the time to clean up any negative credit issues before applying. Your credit history is valuable, and lenders will use it to determine your interest rate and refinancing terms. Make sure it works for you.

Check Credit History Before Refinancing

Take a close look at your credit report. Any delinquent or missed mortgage or other financial payments can have a significant impact on your credit score. When reading the report, look for negative information inaccuracies.

If you have closed credit accounts, for example, they may still be listed as open. Write to the company and ask that the information be corrected. Otherwise, lenders will think you have access to additional credit.

Steps For Improving Credit

Your credit score – a number typically between 500 and 750 – gives lenders an indication of the risk they will take when lending you money. To increase your score:
  • Pay down any revolving credit balances, starting with those with the highest interest rate.
  • Don't apply for any new credit.
  • Pay bills on time.
  • Don't close unused credit cards, as they can lower your score.

Ways to Use Refinancing Funds

As you reshape your credit standing, consider how you'll use the funds from refinancing your Detroit home. Among the popular options are:
  • Home improvement projects, such as a kitchen or bathroom remodel, a new roof or new siding. (Ask your lender about combining a refinancing of your first mortgage with a home equity loan for remodeling).
  • Paying off debt. If you are carrying debt on credit or retail store cards, you might save significantly by refinancing your mortgage with today's mortgage rates.
  • Educational expenses. Always wanted to go back to school in Detroit? With funds from mortgage refinancing, you can pay for classes, transportation and school supplies.


About the Author
Allison E. Beatty is a syndicated real estate writer who has been writing columns for 15 years.