@Anonymous wrote:After I payoff the remainder of my credit card debt next month I will have a significant amount of non-revolving debt that I would like to refinance at lower interest rates.
Specifically I have a capital one auto loan of ~$26k/~39k on a 2018 vehicle I purchased new @ 7.86% along with a ~$31k/~47k personal from Unify FCU @ 12.24% and a payoff.com loan for ~$39k/40k @ 9.25%. In addition I have mygreatlakes student loans for ~$18k/~20k @ 4.19% and ~$4k/~4k @ 6.55%.
Currently even before paying off my last remaining maxed out cc (~9.4k/10k CL) my experian fico score is @ 786, equifax fico 8 @ 796, and transunion fico 8 @ 768. 9% overall Util with one card maxxed (22% personal UTIL not including AU on wifes cards). New payoff.com and Tally accounts not showing on those reports yet.
AAoA is 6 yrs 9 mos (including new payoff.com acct, not including new Tally account). Oldest account 15 years 2 months. 40 total accounts, 22 open 18 closed ( not including new Tally acct.).
100% payment history on time.
9 inquiries on equifax (3 mortgage from december 2020, 1 credit card denial from citi july 2020, 5 auto loan from Aug 2020). 9 inq on transunion (1 payoff.com from july 2021, plus same mortgage and auto as above). 8 inq on experian (one amex from July 2020 approved, 4 auto from aug 2019 and 3 mortgage from dec 2020).
My income is $110k (all w2 salary). Wifes income is $102k salary plus $173k bonus (mainly RSU).
I have another auto loan for ~10k/~20k @ 0%.
Total installment debt payments monthly are ~$3900 (although currently about $400 are student loans so temporarily @0% and not being paid until January). Rent is $2550 per month.
Playing around with some soft pull preapprovals on sofi for student loan, wells fargo for personal loan, and consumers cu for auto loan, it looks like I can already lower my interest rates significantly but I want to wait at least until my last remaining credit card is completely paid off so I can qualify for even better rates. I figure I should also wait until the auto loan inquiries fall off the reports next month. Considering whether I should wait until after December when I should be able to pay off another ~$20k of installment debt with RSU sales assuming stock price remains stable and the mortgage apps age to over 12 months (approved but didn't end up buying the house because owner refused to fix issues). Come March of next year another $30k of the debt should be paid off as well, so waiting until after that is also in the back of my mind as a possibility but I am not sure it is worth paying more interest than I have to until then.
Any advice and/or recommendations are appreciated, especially from anyone that has any similar experience refinancing relatively large amounts of installment debt with high fico scores. I could already BT up to $46k of the debt back to existing credit cards at 0% for 12+ mos for 3-5% in fees right now but I'd really rather keep all the debt on installments so my credit scores stay maximized by keeping revolving util near zero even though it may cost me more in interest overall.
I know my score will decline somewhat if I refinance because the non revolving utilization will increase but I don't see that as a big issue, I figure I will probably still be at least near 800 fico on all bureaus.
I may also want to extend the terms out further into the future (wells fargo goes to 84 month on personal loans for example) in order to lower my DTI even though this may cost me somewhat more in interest (but still should be less than I am paying now). Might be looking to buy a house in the next year or 2 to accomodate my growing family and DTI could be an issue since starter homes are $1 million+ in my area and I likely wouldn't have a huge down payment (maybe only 3%).
That said I am planning to payoff all this debt within 2 years or less if my wife's company's stock doesn't go down between now and then even if I don't refinance.
1. Refinancing may be great economically but the new applications and accounts might damage your mortgage scores, so I would tread very slowly in view of your future mortgage plans.
2. Since installment loan utilization percentage doesn't actually count for much unless you get way down to 9% or so, and your profile is nowhere near that neighborhood, and since it hardly affects the mortgage scores at all, I wouldn't worry too much about that aspect of all this.
3. I suppose that if you do a refinance which lowers your DTI attributable to that loan, that might offset to some extent the score loss in terms of getting you approved.
4. I would steer clear of any of the internet lenders, I would stick with credit unions. You don't want something that might wind up being classified as a CFA on one of your mortgage scores.
5. I wouldn't touch the student loans.
@Anonymous wrote:@SouthJamaica: 1. I didn't think my scores would be too negatively affected by 1 or 2 more new accounts and applications,
I have no idea how much it would be affected; I just know it would be affected
my understanding is that above a certain FICO score level I should qualify for the best rates on mortgage products, so as long as my scores remain in the prime category I should be okay right?
I don't know. I hear that a lot, but have no idea if it's so.
2. That's interesting to note, I was thinking that loan utilization going way up would be more of a negative factor on my scores than a couple of inquiries or new accounts.
(a) I've never detected any major movement from installment utilization except among the FICO 8's and 9's when the aggregate got to below the 10% level. (b) Your loan utilization is already way up.
3. Yes, my understanding is that DTI is much more critical for approval than score,
Again I have no idea; I doubt it's uniform. Underwriters vary in their outlooks. That's why they have underwriters rather than computers. I just know DTI is a factor.
my wife and I were approved for a mortgage in December 2020 with sub 700 credit scores with a decent rate but the amount we qualified for was severely limited due to DTI, especially since lenders significantly discount her RSU income (if they count it at all).
4. I agree, and I plan to do that going forward; that said I already have multiple loans that are probably classified as CFAs on my credit reports (lending club, prosper, sofi, upstart, payoff.com). I have seen the note about CFAs being a negative factor on some of my reports I can look at through my credit cards. My understanding though is that their affect on my credit scores is relatively minor and it doesn't appear that they have prevented my score from going up into the prime level recently.
I have no experience with it. No one knows how much effect it has, although most folks with an opinion seem to think it's not much. But where it does seem to have effect is on older scoring models, which is exactly where the mortgage scores fit in. So my thinking is 'why take a chance' when you can get a better rate with a credit union anyway?
5. Yeah I wasn't really seriously planning on doing anything with them especially since they are at 0% with no payments required right now, but I had checked my rate via soft pull on Sofi for S&G and saw that I could save a bit of money on interest. I agree it is probably not worth the minor savings I might accrue versus the cost of being taken out of the government lending chute where I get a lot of benefits like forbearance, deferral etc. should I need them.
Good.