@cns2002 wrote:Hi all, longtime lurker here and now i need opinions myself.
I'm a homeowner currently, i purchased in 2020 during the height of the pandemic when homes were really low here in GA. Was able to get a conventional loan thru NF for around 6% interest and refi'ed the next year down to 2.8%. 4yrs later, we need a bigger home due to family growth and I plan to apply/buy again through NF around June.
Here's my dilemma. I have a pretty good credit around 760 but I have credit card debt around $10k, with a total of around $200k credit limit combined on all my cards. I make around $80k annually.
I carry debt monthly on the cards open with balances over $2k, if less than that I pay off in full to free up cash to dump into savings. After calculations, I spend about $600/mo on paying on CC debt and $10k consol loan would be around $200/mo for 5yrs.
My question is... Would getting a debt consol loan for the $10k be worth it? Yes i know carrying debt isnt too wise but im a single mom and I dump at least $1k a month in savings for anything (kids, vacations, debt, emergencies, etc). However with wanting to buy a new home, $200/mo consol loan payment seems alot wiser than $600/mo. Thanks, and please be kind. :-)
The problem you're going to run into is mortgage scores are very sensitive to new accounts and inquiries opened within the last year; opening a consolidation loan now will most likely hurt you from an interest rate perspective when it comes to your new mortgage. If anything, I'd advise you do the following:
- Stay with your current credit card debt, paid down as much as possible
- Get the new mortgage
- Take out the consolidation loan
Then there is the savings you have, your absolute best bang for the buck would be to loot your savings and pay your cards off and keep them paid off. Once you have no credit card debt, you'll be able to afford rebuilding the savings accounts to their current level, and even higher.
@cns2002 wrote:Thanks, that's a good perspective i didn't consider. I was thinking of the debt itself, not new inquiries which I do have and will with a consol loan. Appreciate your help!
The point hit against mortgage scores is a hot-button for me these days; like you, I'll be applying for a mortgage soon, probably going for the preapproval as early as next week, and one of the annoyances I have is my mortgage scores are my lowest of any of my scores. Why? A single HP and new account dating back to July of last year. 
@cns2002 wrote:It makes sense, my idea was to dump as much as i can into savings while im able to and its a nice amount i could take from but didnt wanna spend the cash upfront THAT way vs a DC loan if im making sense. Yes I planning to sell my home to upgrade in a bigger one. Equity is around 90k I was actually planning on use towards the down payment of the new home. Thanks for your reply.
Based upon that, I'd strongly recommend paying down your debt and then living basically debt free (except a single trivial CC charge reporting monthly) until you get your mortgage closed.