Solano Real Estate Scene: Holy refi-mania!

Here we go again! Just like during Brexit in 2016, fixed mortgage rates have dropped to 3.875 percent nationwide. Mortgage applications have doubled in America in the second quarter from the first quarter this year. This mortgage rate applies to borrowers with 720-plus FICO scores. Mortgage rates for borrowers with decent 675 FICO scores might pay 4.375 percent. Both rates are OK but as you can see the borrower that has focused on having high FICO scores gets a much better deal. The reason for this better rate is because the statistics show that 720-plus FICO score folks are less risky and have less delinquency over the years. The artificial intelligence programs can review past results and history of loan servicing companies and see how well 675 FICO borrowers perform as opposed to 720 score borrowers. It’s all about the math and the FICO scores. My point here is that some 675 FICO clients are much less risky than the lucky 720 FICO score guys. I have determined that no matter how frustrating it is for me that great people pay much higher rates on auto loans, credit cards and mortgages because of their FICO score, that it is what it is and we have to live with almighty FICO. In order to truly achieve the American dream, a citizen of the USA should just face the fact that the rich are getting richer and the poor are getting poorer and the rich have 720-plus FICO scores. It’s like auto insurance, folks: The drivers with the best driving records should get lower rates than drivers with lots of speeding tickets. Please note if my frustration with FICO isn’t clear. I don’t dislike credit scoring but too often I see a 675 FICO score borrower that gets stuck paying a higher mortgage rate totally based on the credit score even though his or her financial statement is much stronger than some 720-plus borrowers. The problem is that sometimes it is all about the timing of the credit report. Occasionally we see a FICO score of 675 and then 30 days later it is 720 simply because on the date of the first credit report the consumer had a balance on his two VISA cards close to 90 percent of the credit limit. Remember to always make sure your credit card debt is at only 30 percent of the credit line limit on the day your credit is pulled. The other thing to always remember is that your FICO score can be updated during the loan process with some lenders if they help you with a rapid rescore. You must fight to get to 720 or higher to avoid paying 24.99 percent on your credit cards and higher rates on your car and your house.