What's better for underwriter: refinance auto loan for lower DTI or maintain Age of Accounts?

[Anonymous]

Hi everyone,

Really appreciate the input on these boards! A year ago (post divorce and a whole mess of bills, foreclosure in 2017 and past dues) my scores were in the mid 500s. Worked hard over the past year and am now at 710, 716 and 740 with:

Disco: $2900 ($400 balance)

Cap 1: $600 ($170 balance; will be zero this month)

Cap 1: $600 ($0 balance)

Credit 1: $900 ($0 balance)

GM Financial Auto Loan: $18K balance; 24%; $620 monthly (this is the one I would look to refinance to a lower payment)

OneMain Secured Loan: $5K balance

5 medical debts with Americollect approximately $2K total (plan to PFD by year end)

3 inquiries in last 2 years (1/19; 6/19; 6/19)

Right now my average age of accounts is 1 year, 9 months. My GM Financial loan is just over 2 years, so if I refinance that I'll have a lower payment to increase my DTI, but obviously it would be a new inquiry and new account. Any thoughts on what would put me in a better position for a mortgage in 3-6 months? Should I go for the lower DTI or keep the aging account and wait? Any experiences or thoughts on what might look better to a mortgage underwriter would be appreciated.

Thanks in advance!

[Anonymous]

I refinanced out of a 11% interest rate right before aping for a mortgage. The loan officer said it was fine because I lowered my dti. 

[Harmony12]

@Anonymous 

How soon did you refinance before apping for mortgage?

[Anonymous]

I plan to apply for a mortgage late next month or early December. I refinanced my loan (GM Financial, $15K balance, 8.9% int. rate, $450/month) with my local credit union at the end of September with a rate of 3.1% over 10 additional months which brought my payment down to $280 after some other discounts I qualified for. A mortgage loan officer that has been giving me some advice along the way, let me know that it was for sure the best move! I lowered my DTI significantly and the "new account" doesn't look so bad when it's replacing an old account of the same amount that you have a clean payment history for. Also, my credit score went up about 10 points when the old loan was "paid off" and when the new account hit, it only took me down about 3 points.

The one difference is that my car was not my oldest account. My oldest account is about 8 years old, so my "youngest account age" and "average account age" went down but my "oldest account" age was unchanged. 

[Anonymous]

Maybe a month prior 

---

@Harmony12 wrote:

@Anonymous 

How soon did you refinance before apping for mortgage?

---