New Mortgage Hit

[wndrwmn78]

Ugh...we refinanced our mortgage in November 2009, and the new account just now hit my reports. 21 point drop on my Equifax FICO. Of course it happened right after a (now short-lived) 10 point increase last week. Just had to vent.

How long again does it normally take to get those points back - 6 months? Or can it be as long as a year? And that "healing" time would count back to the opening date, not the date it hit my reports, correct?

[Lel]

You might see a recovery in a very short period of time.  Our scores (DW's and mine) were each about 10 points higher 2 months after we got our first mortgage loan back in 2006.  When I refinanced a home equity loan about 2 years ago, I lost 15 points when my mortgage hit, but gained it all back pretty quickly.

And yes, the open date of the account is what matters in determining the age of the account.

In my opinion, a drop in credit score is worth it if it saves me money on interest payments!

[wndrwmn78]

Thanks Lel! I agree - I'll take the lower interest rate for 30 years over a higher FICO. SInce the new mortgage was opened 4 months ago, maybe I'll get lucky and see a decent increase by the summer.

In the past I've always done so many new accounts at once, that I never really knew the effect of each one. I'll take it as a good sign that a new account can cause a 21 point drop!

[BungalowMo]

Oh Man....I'd gladly take the hit to be able to refi!  Mine isn't too bad at a fixed 6.6, but knowing I'm in the ballpark of a 5%, less than 3 years into payments....That is a lot of interest to be saved there! 

[wndrwmn78]

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@BungalowMo wrote:

Oh Man....I'd gladly take the hit to be able to refi!  Mine isn't too bad at a fixed 6.6, but knowing I'm in the ballpark of a 5%, less than 3 years into payments....That is a lot of interest to be saved there! 

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I hear you Mo...we refinanced only one year (to the day) after our original closing. We have an FHA loan, and only 5 weeks later not only did the rates plummet, but the homebuyer credit went from the $7500 loan to the $8000 credit! Our original loan was at 6.25% (which is still good but hard to stomach when they drop so drastically), and our new one is at 5% - and because we were able to do an FHA streamline refinance, the closing costs were pretty low and we didn't need an appraisal.

Also, the timing worked out so that our taxes and insurance were paid right before we closed on the new loan, so we didn't have to bring that money to closing. Plus we got a refund from our old escrow, so after everything was said and done it was almost nothing out of pocket. It might be the only time something has worked out so perfectly for me!