@Anonymous wrote:I have a very interesting scenario I could use some advice on. As many of you know there are quite a few credit cards out there now with very good 0% APR introductory rates for as long as 18 months. I recently ran into a snag while refinancing my home and am considering opening one of these cards to pay down my mortgage. Here are the facts:
1) I just had my FICO scores pulled by the mortgage company, they were reported to me as all being between 765 and 790. I've always had excellent credit.
2) I currently have 5 credit cards with very low utilization (between 1 and 5% on all, and I do use all of them on various purchase categories)
3) My total credit line on those cards is 90K USD
4) My current mortgage is for 218k on a house that appraised at 246k (this is the crux of the issue, it appraised during refi at approximately 30k lower than anyone, myself included was expecting for a multitude of reasons mostly based on unfortunate circumstance. Such as 0 comps being sold in my area over the past year and a half)
5) I have 31K outstanding in studen loans
6) I have never missed or been late with a payment on any of my credit lines for the entirety of my life. I have 0 negative remarks on my credit reports.
7) My oldest credit card is 10 years old. And I have 3 very new (less than one year) credit cards. I've held my mortgage for 6 years. Student loans have been paid for the last 9 years.
All that said because of the appraisal value I need to pay down 20K on the existing mortgage to remove PMI. I have this cash, I can do it with savings, however It would seriously deplete my reserves. So much so that I wouldn't feel comfortable doing that. My PMI payment is roughly $103/mo.
I am wondering if applying for a 0% APR chase slate card (I'm assuming the credit limit would be close to my other higher CL credit cards at around 24K) and using that to pay down the 20 or so grand needed to remove PMI is worth it. I would have 0 issue paying it off as I am able to save roughly 3K a month and also already have the cash reserves. I don't know how badly my credit scores will be affected carrying a balance that high on a brand new credit line over an extended period of time. Any help would be appreciated.
Your credit score will take a major hit and I would think in this scenario you may want to PIF your other cards before statement cuts to keep overall util down as much as possible. That being said If your making 3k payments each month on the card then the balance will come down quickly I figure your lenders would be ok with it. Your score will rebound as the balance comes down. The only concern I would have is that you have three very new cards and lenders could see you carrying a large balance and opening up multiple new accounts and wonder what is up.
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