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Transfer Credit Card Debt to a Personal Loan & Interest Rate Question

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Transfer Credit Card Debt to a Personal Loan & Interest Rate Question

Hi! I am wanting to buy a home before the end of the year .. I have been pre-qualified (they are working on a pre-approval now) with an estimated interest rate of 5.49%. My credit scores (provided by the mortgage broker company) are:

EX 667

EQ 662

TU 687

 

It seems (from credit simulators available through my bank and credit card) that I could increase my credit score noticeably (an estimated 70 points) by getting a personal loan for about $4500 and paying my credit card down to 9%. The difference in the current minimum monthly credit card payment and the new loan payment would be $10 or $15 and would not affect my DTI ratios. My current utilization is 74% (2 credit cards ... 1 with a zero balance 

 

The pre-qualification loan paperwork indicated a $265000 loan with a 5% down payment. I am going to try to stay between $235000 and $250000 for the actual purchase price. I will be buying in the Phoenix Arizona area.

 

So ... my two questions are:

 

1. Is 5.49% a reasonable interest rate?

 

2. Should I look into getting a personal loan for my credit card debt?

 

Thanks for your help!

 

Message 1 of 6
5 REPLIES 5
Frequent Contributor

Re: Transfer Credit Card Debt to a Personal Loan & Interest Rate Question

For item 2, can you pay off the CC debt without personal loan?
Message 2 of 6

Re: Transfer Credit Card Debt to a Personal Loan & Interest Rate Question

No ... I have about $2000 in the bank but was told by the mortgage guy that I should save that for closing costs. My brother is gifting me the 5% down payment.
Message 3 of 6
Regular Contributor

Re: Transfer Credit Card Debt to a Personal Loan & Interest Rate Question

That rate seems a bit high to me with those scores. I was pretty close to those scores (669 middle score) and I got a rate of 4.25. This was about 60 days ago I was given that rate (here in Middle Tennesse).

 

I would suspect you could get a lower rate than that.

 

The personal loan might help with your mortgage scores. Mortgage scores are especially sensitive to CC debt. So the fact in transferring these to a non-revolving credit may help those scores. I am not expert in this categoy, so it may be worth consulting with a Mortgage broker before doing this.

Message 4 of 6
Valued Contributor

Re: Transfer Credit Card Debt to a Personal Loan & Interest Rate Question

You definitely want to get your scores up because that will improve your interest rate & lower your monthly PMI.

You can also improve the rate & PMI by going with a Home Possible loan if your income is under the limit.

 

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.
Message 5 of 6

Re: Transfer Credit Card Debt to a Personal Loan & Interest Rate Question

Thanks for all the feedback!

I make too much money for the Home Possible program ... and need to get a conventional loan ... because I live in a community property state, an FHA loan won't work... my husband's scores are noticeably lower than mine plus I would have to include his debts which would kill my DTI ratios.
Message 6 of 6
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