Applying for a credit card while looking for a home

[chihhsic]

I've been looking for a home for almost a year now. The market is tough and I'm relatively picky, so I don't mind paying rent a little longer until the perfect home arrives. Basically, I don't have a mortgage loan in the works yet, but hopefully I'll be applying for a loan in the next 6 months. That said, I have applied for a lot of credit cards in the past few years to get sign-up bonuses. I still have most of these credit cards (9, I think) and maintain a very low balance/credit limit ratio (<10%). However, there are 2 credit cards I'm VERY interested in (GREAT perks/bonuses) that I"ve been dying to apply for, but have been holding off for months now because I keep on expecting that perfect home to show up. I know traditional dogma is to not apply for any major credit for about 1 year prior to a home loan, but how strict is that? I was thinking of applying for 1 or both of them and shifting my credit limit on the other cards toward this one, so my overall total credit limit isn't much higher (currently ~$100K).

FWIW, my last credit card applications were in Sept 2012. My CK, CS scores are in the high 760s and I'm considered to be in the high income bracket. However, I have 2 homes attached to my name already (total mortgage $3K)

[pizzadude]

I'd hold off unless you know for certain that it won't put you in a position of having a higher interest rate due to a lower FICO score.   You will lose a few points due to the inquiry for the CC and also the potentially lower AAoA. 

[chihhsic]

Thanks. I'm pretty confident the application of the credit card won't drop my middle score below 740. My bigger concern is if just applying for the credit card(s) will raise some sort of red flag. My AAoA is already the weakest part of my file. Like I said, I have 9 or so cards (probably 10-11), and the majority of those are <2 years old. My AAoA is probably a little over 2 years only because of this despite having credit that goes back 17 years (loans, cards). I'm wondering if 2 more cards will make a huge dent in the AAoA. It might drop from  25 months to 23 months or something. 

[pizzadude]

Is there a reason that you feel compelled to app now?  Are the perks / rewards for these cards going away this year or could you just wait until you've closed ?

[chihhsic]

Yeah, one card's benefits goes away 5/15/14, the other may go away any time. I do the card applications to get miles/cash back, and these are the best 2 cards on the market in a while. One may go away for good. 

[pizzadude]

I'd advise against applying for 2 cards.   It could drop your AAoA below 2 yrs and you'd have at least two inquiries.   

[chihhsic]

Thanks. I'll probably hold off. I've been holding off for a while now, but I really don't want this opportunity to pass.

I just checked CK-- my AAoA is 34 months, a little longer than I thought. I've got quite a few cards, so I don't think 2 new cards will drop me below 2 years.

[Revelate]

Prioritize.

If house > cards, don't apply for cards

If cards > house, well....

Frankly the mortgage process sucks.  Shouldn't do anything which complicates things, always show a bureaucrat what they're expecting to see and the same applies for mortgage underwriting as well.  

Until recently I was in the same boat you were: my own housing dream is being shoved aside to chase a different goal, but in the delay from expecting it in 6/13 to now, I kept a clean sheet expecting it.  Credit cards come and go, a house (and a mortgage) you're usually going to have a while.

ETA: if you're waiting for the right house to come up, depending on your market, you should likely be making your application right now: at least out here I can't get a pre-approval worth a darn in the 3-7 days or so window that a good, "reasonably" (for this market) priced house is on the market for offers.  Need to have your paperwork together and make that offer right then and there, and let the contingencies handle it if the deal falls apart.  This is especially true if you're particular about the house you want, I'm not, and even I have to do this.  Market is all sorts of sideways in my opinion, limited inventory changes the dynamic of the home buying process.  Go through as much paperwork possible as soon as you're ready to pull the trigger, which sounds like right now.

[takeshi74]

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@chihhsic wrote:

I know traditional dogma is to not apply for any major credit for about 1 year prior to a home loan, but how strict is that?

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As always, depends on your mortgage lender.  Confirm directly with them.  Don't rely on generalizations, forum experts or what you feel.  Verify what they're looking for (both postiive and negative).