| Many American homeowners have used refinance | | | | yourcredit only once every few years. Usually, they |
| agreements tosave money on their interest rates while | | | | would checkyour credit scores when renewing your |
| pulling cash out oftheir homes to pay debt or make | | | | card or when yourequested a credit line increase. |
| major purchases. Mortgagelenders tout the practice as | | | | Today's sophisticated credit monitoring systems report |
| a clever way to save money orachieve a major life | | | | youractivity on an almost daily basis. When you make |
| event like college tuition or awedding. | | | | a move withany of your creditors, the data create a |
| If you're considering pulling some cash out of your | | | | trail of ripplesthrough the fabric of your current credit |
| ownmortgage by refinancing, take a look at the rest of | | | | relationships. |
| yourpersonal credit. You could inadvertently cause | | | | Sometimes, your new debt burden may trigger an |
| yourself muchgrief while the savings you earned during | | | | automaticsystem that shoots your credit card's |
| the refinance getsucked away by other lenders. | | | | interest rate by tenor fifteen percentage points. |
| All lenders look at your debt to income ratio, along | | | | Worst of all, you won't know about the increase until |
| withyour credit score and other factors, to determine | | | | itshows up on your statement. Buried in the fine print of |
| the linesof credit they want to extend to you, as well | | | | yourcontract with your credit card lender are |
| as theinterest rates they expect you to pay. Most | | | | statements thatallow them to change your interest |
| banks tie theircredit card interest rates to the prime | | | | rate at will, with only amaximum of fifteen days' notice. |
| rate set by the | | | | Even if you thought youearned a promotional deal or a |
| Federal Reserve Bank. Because you pay a number of | | | | fixed rate, your interestcharges could balloon overnight. |
| pointshigher than the prime rate, you might be used to | | | | Therefore, before considering a cash out refinance, |
| seeing thatinterest rate fluctuate without experiencing | | | | talk torepresentatives at your credit card companies |
| any majorsurges. | | | | about whetheryour plans could backfire on you. Pay |
| When you take equity out of your mortgage during a | | | | off as much of yourcredit card balances as possible |
| homerefinance, you increase your debt load. | | | | before you cash out so youcan minimize your debt to |
| Therefore, your debtto income ratio looks less | | | | income ratio. If your credit cardinterest rate increases, |
| attractive to lenders. | | | | use some of that freed-up cash tofree yourself from |
| In previous decades, credit card issuers would review | | | | that card. |