Refinance credit is similar in nature to mortgage credit, but with one distinct detail: Refinance credit is a type of loan or credit that is used to refinance a loan that already exists. When it comes to mortgage credits, the first mortgage that you take out is standard mortgage credit, and then when you take the old loan and roll it into a new mortgage loan, what you have is refinance credit. Both will have bearing on your credit report score, so it’s important to make an educated decision. There are numerous reasons for taking out refinance credit on your home loan, so consider the following:

– * You may want to consider refinance credit if you have an adjustable rate mortgage and want to refinance into a fixed rate mortgage. If interest rates are currently low, and you would benefit from a lower interest rate, then this is a popular reason for why you would seek refinance credit. The same thing goes for if you have a high interest fixed rate loan and want to refinance into a lower interest rate or an adjustable rate mortgage. Lower payments will make it easier for you to protect your credit report and score.

– * Another reason for seeking refinance credit may be to refinance into a longer term mortgage in order to lower your payments. If you have 20 years left on a 30 year loan, and you apply for refinance credit into a new 30 year loan, the remaining payments will be lessened by spreading them out over the 30 year term in favor of the shorter 20 year term. This is especially useful if you are having trouble making your monthly payments and want to make your monthly payments smaller. In these trying economic times, making your monthly payments smaller is a good motivator for refinancing your home loan. The best credit report surfaces when payments are more manageable.

– * Refinance credit also has other potential purposes. If you have equity in your home and you apply for refinance credit, you may be able to pull cash out of your home in the form of your equity, which is extremely useful considering our current economic status and how badly some people are hurting financially. This type of cash out refinance credit is especially useful in situations where you need money for medical bills, home repairs or other emergency situations where coming by some extra cash would be extremely useful. While a new credit report will not be generated in this instance, using the cash to pay off old debts will reflect nicely on your credit report.

It is worthwhile that you consider refinance credit if there is some benefit that you can take out of refinancing your current mortgage loan.