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New Contributor
Posts: 64
Registered: ‎12-01-2011
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Should I refiance?

I am working diligently to rebuild ny credit. I bought a new car last year and financed through Chase with a 21% interest rate. My score was 539, and I was desperate to have ANY kind of credit so I took it. I have been working very hard to rebuild and my EQ is 606, TU 618. I am wanting to buy a house by May 1st through a program for Native Americans. My scores right now would likely get me apporved for this program.  I would like to refinance before applying though so I can lower my car payment and qualify for a larger mortgage.  I have 2 paid judgments that are over 4 years old, my car loan, one CC with no balance, one charge off for $400 from 4 years ago that I am working on paying. Would a refinance drastically hurt my scores right now? 

Starting Score: 539 EQ 11/1/2011
Current Score: 648 EQ SW , 670 TU SW, 654 EX (MTG Pull 8/19/2013)

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Established Contributor
Posts: 951
Registered: ‎05-27-2009
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Re: Should I refiance?

The harm would be from:

 

1. The inquiry for the new account (<5 points realistically), no big deal.

2. The new account, which you would get dinged for, along with lowering your AAoA, which could have a minor affect as well.


Net effect I wouldn't think would be over 10-15 points, but it could hurt if you are borderline. Thats a lot of negatives in your past; I wouldn't want to lower my score any further if not absolutely necessary.


Starting Score: 627 EQ, 621 TU - 11/15/08
Current Score: 778 EQ, 781 TU, 778 EXP 07/20/12 Lender Pull
Goal Score: 800 EQ & TU


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Frequent Contributor
Posts: 315
Registered: ‎05-28-2011
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Re: Should I refiance?


cdtotten wrote:

The harm would be from:

 

1. The inquiry for the new account (<5 points realistically), no big deal.

2. The new account, which you would get dinged for, along with lowering your AAoA, which could have a minor affect as well.


Net effect I wouldn't think would be over 10-15 points, but it could hurt if you are borderline. Thats a lot of negatives in your past; I wouldn't want to lower my score any further if not absolutely necessary.


+1.

 

If possible pay off the auto loan


 

TU Auto enhanced FICO (9/2012): 744
EX FICO (8/2012): 748
EX FICO (6/2010): 739
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Valued Contributor
Posts: 1,057
Registered: ‎09-29-2009
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Re: Should I refiance?

If you are looking to purchase a home within the next 2 1/2 months I would get in contact with someone from the home loan program before you make any financial moves at the moment. They should be able to explain to you what scores you will need and what debt to income ratios will be allowed. If you are dealing with a special financing program, most of us in this forum are not going to be able to offer you qualified advice as to how your refinance may affect the program chances.

 

I know that when I financed through VA I had to write Letters of Explanation for all negative items and any other financial transactions within the prior six months, including inquiries and new accounts. Good luck in whatever choices you make.

Best financial advice I ever got: "Just imagine what an adult would do and do that."

Starting Score: 500's
Current Score: EQ 701 (FICO) TU 721 (FICO) EX 715 (Quizzle)
Goal Score: 760 ALL


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Frequent Contributor
Posts: 428
Registered: ‎01-21-2012
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Re: Should I refiance?

If you have those scores, with a good recent auto history, I would guess you could get a much lower interest rate. I would try Wells Fargo Dealer Services, or your local credit union. Capital One is an option as well, but they will HP all 3 CBRS.

 

Here are a few links:

 

Wells Fargo Dealer Services - http://www.wellsfargodealerservices.com/Consumers/Loans/ApplyOnline/default.asp

 

Capital One Auto Finance - http://www.capitalone.com/auto-financing/auto-refinancing/before-applying/?Log=1&EventType=Link&Comp...

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Posts: 9,674
Registered: ‎01-28-2010
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Re: Should I refiance?

I second the advice to hold off on your auto refi until you know exactly where you stand with qualifying for a home loan through this special program. If you are borderline with your scores then you shouldn't be adding new inquiries or accounts, it might drop your score below the cutoff.

I understand that you want to lower your monthly payments to qualify for a larger mortgage, just talk with your loan officer and see where you stand first.
March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
Established Contributor
Posts: 607
Registered: ‎08-30-2007
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Re: Should I refiance?


pizzadude wrote:
I second the advice to hold off on your auto refi until you know exactly where you stand with qualifying for a home loan through this special program. If you are borderline with your scores then you shouldn't be adding new inquiries or accounts, it might drop your score below the cutoff.

I understand that you want to lower your monthly payments to qualify for a larger mortgage, just talk with your loan officer and see where you stand first.

I agree with pizza.  Ordinarily it would  be a no-brainer to refinance, but you don't have any wiggle room here. Any new loan will most likely be detrimental to your Fico in the short term.....which is a potential problem for you.  If you can wait a little while to recover, refinancing would be the best option as the potential to lower your fixed auto payment and improve your DTI would help you with your goals here.  Only your loan officer can tell you what your best options are.  Good luck.


Starting Score: 500's
Current Score: 725 EQ(DCU), 739 TU(Barclay)
Goal Score: 760 X 3


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