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concorduser
Posts: 6,025
Registered: ‎09-18-2007
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Which part of the catch 22 is better?

Which part of the catch 22 is better? I understand having a credit mix is good. That means having a mortgage. So having a mortgage would boost the fico score. That means I have to get a mortgage. But if my scores are not high enough then getting the mortgage becomes expensive.
 
Now Questions.
 
What kind of boost do we see if we have a mortgage listed on the CR?
How long does it take for the score boost to appear on CR?
So technically the amount of the loan should not matter. If that is the case, should I buy a small property to start with and get the mortgage and have it listed on CR and once the scores goes up then go for the real house that I want to purchase?
 
If that is the case, I can find a less expensive property some where for 40-50 K some place and have the mortgage show on my CR and wait 6 months and then go for the real property that I want to purchase.
 
Does it make sense what I am thinking?
 
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ByrdMan
Posts: 7,975
Registered: ‎12-19-2007
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Re: Which part of the catch 22 is better?

The problem you might run into with that line of thinking, Concord, is that you might have a dickens of a time getting someone to finance a property that is worth $40-$50M. It is just not worth their while to finance a loan so small. After your downpayment of 5-20% or so, the loan will range from $32-$47M. If you go to a local CU, you might get the loan on an installment-type basis.

Not sure about the credit mix affect on the score.
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Do what is true in spite of the consequences--your future is only as true as you are.
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haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007
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Re: Which part of the catch 22 is better?

For all those who just dampened their drawers, let me mention that ByrdMan works in commercial finance, and they use M to mean thousand, rather than K. So he really wasn't discussing buying property for $40-50 million! :smileyvery-happy:
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
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haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007
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Re: Which part of the catch 22 is better?


concorduser wrote:
Which part of the catch 22 is better? I understand having a credit mix is good. That means having a mortgage. So having a mortgage would boost the fico score. That means I have to get a mortgage. But if my scores are not high enough then getting the mortgage becomes expensive.


Hi, concorduser, I just wanted to point out that we have had several new members lately (as well as some long-termers) with scores in the high 700's and the 800's who do not have mortgages. Like other installment loans, they're good to have as part of your profile, but they don't contribute all that much numerically to your scores --nothing like the impact of your revolving credit and its util.

I would think that the smart thing to do would be to keep growing your scores with the revolving and installment credit that you have. When the time comes that you find some property that really fits your needs and wants, you will have the scores that will get you the best possible terms.

To me, this is one of the situations where financial smarts outweigh scoring strategies.
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
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concorduser
Posts: 6,025
Registered: ‎09-18-2007
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Re: Which part of the catch 22 is better?

Hi hauling, I agree with you. You are right, I think I should what is more important and financially sound decision than getting into bogged down into frenzy. Thank you very much for your kind words and good advice. The more I think about it the more sense it makes to me and it is the right way of doing things.
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BBYGRL
Posts: 511
Registered: ‎10-18-2007
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Re: Which part of the catch 22 is better?

[ Edited ]
I don't have a mortgage - yet. I think the average age (19 years), credit mix ('06 auto loan included) and no derogs have helped.


Message Edited by BBYGRL on 01-10-2008 05:40 PM
10/08 - EX 795 / EQ 816 / TU 806
6/09 - EQ 763 / TU 770

Starting Score (2/2010): TU-767, EQ-745
Current Score (2/2010): TU-767, EQ-745
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