Mortgage Scores After Refinancing

[UpInSmoke]

Does anyone have any idea if I can expect for my mortgage scores to drop after refinancing?

 

Here's my situation:

I signed the loan docs for my refinance just this week. It's supposed to fund on Monday, September 28th. On Tuesday, September 22nd, I put an offer on an investment property that was accepted the following day (Wednesday, September 23rd).  I received a soft pull pre-approval, however I'm waiting until my refinance funds before doing a complete hard pull application, because I don't want any problems with refinance. Should I be concerned that my score is going to drop when my old mortgage is paid off and before my new mortgage is reported? Right now, my middle score is 747 and I don't want to scores to drop before I get pre-approved for my investment property purchase. Should I hurry and apply as soon as I know the loan is funded, so I don't take the risk of my score dropping because of the payoff of the old mortgage? Any of you mortgage gurus have any knowledge, insight or experience with this situation?

 

Thank you in advance!

[cv91915]

It will take some time for the old mortgage to report as paid, and it will likely take even longer (often, months) for the new one to report.

 

 

[UpInSmoke]

CV, thanks for the reply. So, the payoff of the mortgage is not as quick to report like a standard monthly payment? Will my mortgage scores drop significantly when it does report paid off? And then again when the new mortgage reports? I would just hate to get caught in the middle.

[cv91915]

10 hours ago, UpInSmoke said:

CV, thanks for the reply. So, the payoff of the mortgage is not as quick to report like a standard monthly payment? Will my mortgage scores drop significantly when it does report paid off? And then again when the new mortgage reports? I would just hate to get caught in the middle.

Paying off a mortgage has a number of backend processes before the entire process is complete. 

 

This includes the recordation of a lien satisfaction in your local jurisdiction.  If you have an escrow account, that needs to go through final reconciliation and a refund needs to be mailed to you.  The loan needs to be closed out in the servicer's system and there is probably a MERS update required.  I'm probably missing several other things.  Your loan isn't really closed out until a number of activities are coordinated with multiple third parties.

 

If you have at least one other open installment loan you may not notice much difference when the old mortgage reports as closed/paid.  When the new mortgage reports several weeks/a few months later you will probably see a modest drop due to the new account and the ratio of the loan balance to the original loan amount near 100% (but it's nowhere nearly comparable to having a credit card report as maxed).

 

[UpInSmoke]

Very helpful! Thank you, CV!


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