WWYD??

[Anonymous]

Hey everyone,

First I am posting from my phone so I apologize for errors or bad formatting.

So the situation is this:

Was planning on buying a house in a few months.  My car (593 a mo) was due to be paid off next april so I figured this wouldn't count against my DTI.  Was in good shape.

Except... the car had been having a rough time lately.  The rear end was beginning to go out.  I saw my dream car online for a deal.  I traded my almost paid off car in.  My payments are about the same now so that isnt an issue, except now its going to count against my dti.  It's also a new account but I think my credit will recover a bit in a couple months.

Bigger question revolves around one of the other vehicles I financed way back when my credit score was in the 500s.  The interest rate is an embarrassing 23% (my new car is 5.5%).  Refinancing would help my dti greatly as I'm paying 450 a month.  I already took the inquiry hits.

But it would be another new account.  Wwyd?

[Girlzilla88]

You don't want any new accounts for at least minimum 3 months before Home shopping, refinancing would be a different story but do keep in mind you want to keep your inquiries to a minimum as well.       If you knew it would be a sure thing and you would only try with 1 place I would consider it to help with your interest and other but seriously think it over.      You don't want to add more hurt to the chances of you getting a Home.

[Anonymous]

Right, so I figure October, nov, to shop for the house.  Is it not true about multiple enquiries counting as 1 within a certain amount of time?  I thought that was the thing which is why I was seriously considering this.

The other vehicle will not be paid off until 2023 and it seems stupid to continue  paying 23%...  payments could be halved.  I just wonder if it's more stupid to take on a second new account, or keep paying so much.

I have no guarantees of approval but I get a lot of offers to refinance this on credit karma at around 3%

[Anonymous]

You already reset your age of youngest and took inquiry hits

If you still have time to combine the inqs it may be a ever-so-lesser hit

You would still be dropping your AAOA, , and resetting your loan utilization to 100%

Don't be surprised if you drop like 20+ points already for the first account and then a couple more on a second refi. 

There's no going back from the first account, I wouldn't expect the best rate on a mortgage by any means if you shop this year

[Anonymous]

No all installment inquiries done within 45 days of the first one count as one, on all versions except EX2 where the timeframe is 14 days. It’s called deduplication.

Installment loans don’t reset your youngest account metric as far as scorecards go anyway, only revolvers do that.

Nevertheless mortgage UW don’t like to see a lot of new accounts recently, but you’re right, you’d be a fool to keep going at 23% if you had the opportunity to take it below 5%. Even if you got a put off the mortgage for a couple months.

[Anonymous]

Hmm.  I'm stuck on this fence.  But you have good news Birdman.

On the other hand all the offers I am getting are for 3 year loans.  Which is fine and all, but even with offers of 2.X% it is only dropping my monthly payment by around $80 to do a 3 year refi.  Of course it would be better to have it paid in 3 years but the whole point was to try to recover my DTI ratio a bit prior to applying for a mortgage, and since it won't really be helping there, I'm not sure if it's worth another new account right now given my future plans.

While I hate paying 23%, I think I might suck it up and wait to refinance until after the house.  Once I get the house thing done I expect it will be several years before I'll be in the market to apply for anything big again, anyway, and the score drops won't really matter.

[Anonymous]

@Anonymous You’ve got to do what works best for you financially. But, if you do the refi close enough after the mortgage pulls, all the inquiries will count as one even though you get several inquiries and two new accounts. You’ll be a little more squeezed on EX2, but I doubt that will be used for the vehicle refinance anyway.

But, I saw somebody this year get four brand new revolvers and then get a mortgage refinance! But it’s definitely not the recommended path for someone with your profile. GL!

[SouthJamaica]

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@Anonymous wrote:

Hey everyone,

First I am posting from my phone so I apologize for errors or bad formatting.

So the situation is this:

Was planning on buying a house in a few months.  My car (593 a mo) was due to be paid off next april so I figured this wouldn't count against my DTI.  Was in good shape.

Except... the car had been having a rough time lately.  The rear end was beginning to go out.  I saw my dream car online for a deal.  I traded my almost paid off car in.  My payments are about the same now so that isnt an issue, except now its going to count against my dti.  It's also a new account but I think my credit will recover a bit in a couple months.

Bigger question revolves around one of the other vehicles I financed way back when my credit score was in the 500s.  The interest rate is an embarrassing 23% (my new car is 5.5%).  Refinancing would help my dti greatly as I'm paying 450 a month.  I already took the inquiry hits.

But it would be another new account.  Wwyd?

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What I would do is get rid of a 23% loan. It's not the embarrassment, it's the money

I'm sorry, I didn't absorb the part about the mortgage. Don't do anything until after the mortgage has closed.  Then get rid of that sucker.