Average home prices nationwide were 12.4 percent higher in August 2013 than they were at the same time in 2012, according to the CoreLogic Home Price Index. That month was the seventh in a row when year-over-year home price rises were in double percentage figures, and the 18th when they rose at all. Although those increases weren't consistent across the country, they still mean that millions of Americans have seen their underwater home loans break the surface and finally return to positive equity. And that, in turn, means it's easier for them to refinance at a good interest rate.
However, the very lowest mortgage rates are reserved for those with great credit, and it is a good idea for everyone to pull their reports before making any significant credit application, let alone a new mortgage. This applies, even if you are one of those people who always act responsibly with your finances. Earlier this year, CBS News reported that an estimated 40 million Americans have errors in their reports -- half of which are serious -- so being innocent is no guarantee that you will have a spotless record. Since 2005, Americans have been legally entitled to access a free copy of their credit reports once each year, and you can exercise your right at AnnualCreditReport.com.
In a downloadable PDF, the National Consumer Law Center describes what you should look for once you have your credit report in front of you:
It can sometimes be hard to persuade a credit bureau to correct errors. For more information, check out Five rules for fixing credit report errors.
If your credit score is lower than ideal but you don't have grounds to appeal, you can still do some things that might bump it up a bit. Most of these are likely to take a few months to have any impact, but they are well worth doing because they just might put you into a different borrower category which may entitle you to lower refinance rates.
Here are some suggestions:
Follow that advice, and there's a better chance your score would rise over time. Of course, it can take years to fully repair a badly damaged report, but some improvements can be seen over just a few months -- and they might just be enough to win offers with lower rates. Good luck!