About 5 months ago I took a rebuilder loan for $3500 from my local credit union. I just simply put the unsecured loan funds in my savings and started making the payments on it. I been thinking about lately to pay it off early so I can get that debt out of the way before apping for a mortgage. Would this be a wise idea at all? Or should I keep the loan funds in my savings and just continue to make the payments till after the mortgage process is completed? Its not a huge deal as far as the home we like to purchase, We already qualify for more than we need with where out DTI is currently at.
@meehan22 wrote:About 5 months ago I took a rebuilder loan for $3500 from my local credit union. I just simply put the unsecured loan funds in my savings and started making the payments on it. I been thinking about lately to pay it off early so I can get that debt out of the way before apping for a mortgage. Would this be a wise idea at all? Or should I keep the loan funds in my savings and just continue to make the payments till after the mortgage process is completed? Its not a huge deal as far as the home we like to purchase, We already qualify for more than we need with where out DTI is currently at.
Keep it then: the only reason to pay off a loan early when we're talking mortgage qualification is to clear a DTI hurdle, in reality paying it early may actually reduce your score somewhat depending what's on your report, and really you want to extend that loan as long as possible when we're just talking FICO purposes.
I usually do my rebuilder type (or FICO goodness loans) at a much lower dollar value, but the principle remains the same: extend it for as long as the costs are financially trivial.
@Revelate wrote:
@meehan22 wrote:About 5 months ago I took a rebuilder loan for $3500 from my local credit union. I just simply put the unsecured loan funds in my savings and started making the payments on it. I been thinking about lately to pay it off early so I can get that debt out of the way before apping for a mortgage. Would this be a wise idea at all? Or should I keep the loan funds in my savings and just continue to make the payments till after the mortgage process is completed? Its not a huge deal as far as the home we like to purchase, We already qualify for more than we need with where out DTI is currently at.
Keep it then: the only reason to pay off a loan early when we're talking mortgage qualification is to clear a DTI hurdle, in reality paying it early may actually reduce your score somewhat depending what's on your report, and really you want to extend that loan as long as possible when we're just talking FICO purposes.
I usually do my rebuilder type (or FICO goodness loans) at a much lower dollar value, but the principle remains the same: extend it for as long as the costs are financially trivial.
Thanks for your insight. Thats what I figured but wanted to be certain. The loan dollar amount is a bit high, I had some other plans for part of the loan value than changed my mind. I think what I'll do is pay off a large portion of it to eliminate some interest charges and keep it open unless the mortgage company tells me otherwise.
Thanks again for your help!