Prepping for Mortgage qual...raise scores?

[Dw4250]

So I'm going to be applying for a mortgage later this year.  Going the conventional loan route...5-10% down is the goal.

I recently pulled my 3-B scores on here, including the mortagage FICO scores (04?) and they were significantly lower than my "regular" FICO 08 scores (40-50pts lower).  My mortgage scores are 700, 683, 680, which would put my mid score at 683.

I'd like to get my mid score to 700+ in order to qualify for better interest and PMI rates.  Looking at my report, I do have a lot of small/med balances reporting (12/17 accounts reporting; most of them are taking advantage of 0% deals).  My overall UTL is right around 14%.

My question is: would it be better to do a BT and consolidate all of those small/medium balances onto 2-3 cards, with everything else reporting $0.00 keeping overall UTL ~14%?  Or would carrying large balances on a couple cards set off alarm bells?  Does anyone know how FICO 04 weights # of accounts carrying balances?

One caveat...I technically have the money to pay off my cards now, but I'd like to keep that money "liquid" to apply toward the down payment (and gradually pay off my 0% balances over the next 10-18 months).  

Thoughts?

[Anonymous]

couple questions, I'm sure there will be others does the amount of CC debt equal enough to limit you on DTI considerations for the loan? Consolidating them might give you a bit of a boost (too many accounts showing a balance is a negative factor) getting the UTIL down to 9 percent might give you another boost. From the reports I have personally pulled (entirely anecdotal but a data point) my mortgage scores have a far more stable pattern than my 08 scores do. I get some silly swings on the 08 scores (think 20 pts for 20 bucks less or more reporting on my 1 card that shows a balance) where my mortgage scores move a pt here or there. My file is thin, and is generally very stable, just one card shows a balance at statement cut, usually less than 60 bucks most often 35 dollars.

[Dw4250]

---

@Anonymous wrote:

couple questions, I'm sure there will be others does the amount of CC debt equal enough to limit you on DTI considerations for the loan? Consolidating them might give you a bit of a boost (too many accounts showing a balance is a negative factor) getting the UTIL down to 9 percent might give you another boost. From the reports I have personally pulled (entirely anecdotal but a data point) my mortgage scores have a far more stable pattern than my 08 scores do. I get some silly swings on the 08 scores (think 20 pts for 20 bucks less or more reporting on my 1 card that shows a balance) where my mortgage scores move a pt here or there. My file is thin, and is generally very stable, just one card shows a balance at statement cut, usually less than 60 bucks most often 35 dollars.

---

No I think DTI will not be an issue although you raise a good point about a bunch of small balances showing a $25-30 minimum payment which could add up to drive up debt artifically and make DTI look worse than it is.  I may just try to get my 14% to 9%...not looking to start looking for houses until late summer/Fall.

[takeshi74]

---

@Dw4250 wrote:

Or would carrying large balances on a couple cards set off alarm bells?

---

At what utilization?

[Anonymous]

---

@Dw4250 wrote:

One caveat...I technically have the money to pay off my cards now, but I'd like to keep that money "liquid" to apply toward the down payment (and gradually pay off my 0% balances over the next 10-18 months).  

---

Are these cards on 0% intro rates? Otherwise, you're probably burning through a fair bit of cash by paying interest at exorbitant rates. You might find that if you pay them down to 0 and don't have the interest dragging at you anymore, you can refill your liquid cash fairly quickly. 

[Anonymous]

You should have your Fico 4 pulled by a lender to verify your scores. That could change your game plan.

If it were me, I'd absolutely pay down the cards to get my score as high as possible if I were going the conventional route. When comparing a 5% down 720 vs. a 10% down 690, PMI will be comparable, but your interest rate will definitely be lower with the 720.

[Anonymous]

---

@Anonymous wrote:

You should have your Fico 4 pulled by a lender to verify your scores. That could change your game plan.

If it were me, I'd absolutely pay down the cards to get my score as high as possible if I were going the conventional route. When comparing a 5% down 720 vs. a 10% down 690, PMI will be comparable, but your interest rate will definitely be lower with the 720.

---

+1. Definitely, pay down the card balances. 720 or there abouts is a significant breakpoint for mortgage rates. Also, time alone should help boost those scores.

On a related note, the OP should consider putting down 20% to avoid PMI. While one can potentially invest that cash elsewhere for better returns, for many, unless they're investment savvy, do better to put down more avoiding PMI; reduced mortgage payments.