@clh4444 wrote:
I currently have a 733 score but am looking to refinance our mortgage in the near future. At the date of the original mortgage, I had to use my mother in law as a cosigner as I still had a mortgage on a condo. I finally managed to sell the condo and would like to refinance now without my mother in law.
I have two lines of credit at bank. One is closed with balance of 5000 that I am just paying off, the other is about 9500 balance with 17500 credit line.
I have two credit cards. A maxed out chase at 6000 and a lowes from our kitchen remodel with a balance of 9000 out of 13500. By August I will have paid down the lowes enough to then transfer the balance to my 17500 credit line in order to avoid paying any interest but that will max put that credit line as well. Which I know carrying balances is bad for your fico score but I want to avoid the 13 months of interest on the lowes.
I could probably pay down the chase card to 50% utilization by then also.
Is there anyway to improve my fico score up to 760 to get the best rate or am I pretty much going to have to accept I am in the 2nd tier for the refinance rate.
Welcome to the forums!
Paying your balances down is the route to score improvement for you besides letting time pass, well that and potentially thickening up your revolving tradelines a bit but on any short time horizon there's more negatives than positives with that typically.
What window are you looking to refinance in? Also the big question is what is your interest rate currently? Is your mother looking to get off the loan as the impetus for this? Also are you absolutely certain your lender of choice has a tier at 760? Most are at 720 or 740.
You'd probably gain a few points if you kick $1300 or thereabouts to the 6000/6000 chase card (get it under 80%, it might be 90% but we're a little unclear on the exact percentages currently) and then zero out the lowes on the 0% interest card which just makes financial sense and paying it off as you can. I would suggest if you're trying to refinance in short order, simply wait till the refinance is done and then go pick up two decent rewards cards for your spending such that you can get 5 revolving tradelines, and having two with balances is pretty close to optimal, but that'll likely be a penalty in the short term. Lots of information on that here in the forums.
End of the day you're right: reducing your balances is the way to eek out more points really, everything else is just lipstick on the pig.
@clh4444 wrote:
My interest rate is 3.375%
Partly we want to refinance to remove my mother in law and partly because we are paying pmi on the mortgage because the original loan was for 160000 the value of of the appraisal based on condition of the house at time of sale. After a year we have replaced roof, added hvac and gutted the entire downstairs with a new kitchen and renovated half bath. We are working on repairing the rotted porch and painting the exterior in the next few months and added a huge deck and parking.
My plan was to wait until we have the master bath completed upstairs since you can't refinance while under renovation and then refinance. Since the house should appraise for around 260000 after completion this will eliminate the pmi and remove my mother in law.
So time line is to refinance early next year.
Think I'd just go with the plan as outlined in that instance: the problem with trying to play reindeer games by getting 2 more accounts is that your score is already good right now, and that's with non-trivial utilization which I'm guessing is around 26k/35k from what you intimate and a maxxed out tradeline to boot. If you were talking a year or more I'd recommend a more aggressive approach.
A HELOC might've been a better way to finance this originally, and if you didn't have the 0% option I'd have suggested running out and getting a consolidation loan (probably could've gotten 7% from Lending Club or a decent CU with your stats and maybe better). With sixish months if you were able to pick specific lenders to get a pair of high limit cards on that'd help, but it's something of a difficult sell when you have a bunch of utilization currently.
Do you have any cash reserves now? An alternative option would be to stuff your near term slush fund into a savings account or shortish-term CD that you could take a loan against at 2-3% and then hammer your credit card debt without blowing all your reserves in the near term.
@clh4444 wrote:
Well, a few things I've learned today. I called the bank to just ask for clarification on the pmi and refinancing rates based on fico scores.
My FHA loan requires one to pay pmi for 5 years so unless I refinance then we are stuck with that extra payment for another 3.5 years. However, interest rates are a full percentage higher now than what I currently have so it actually is more financially sound to just pay the pmi and apply to have it dropped once the deadline in 2017 gets here than it will be to refinance at the higher rate. The fico cutoff wells fargo uses is typically the 720 range so I was actually good there.
I also learned i can just assume the loan from my mother in law as long as i submit a credit app and pay about 600 in fees plus get a real estate lawyer to remove her from the deed and complete the closing documents. So for around 1000 dollars I can accomplish the one goal and the pmi will just have to wait.
Sounds like a wash or even cheaper than the origination fee on a refinance application: congrats for getting it figured out!
