@Anonymous wrote:I know this has been talked about before but I wanted to gather new opinions.
I have an autoloan that is just under a year old, it is financed through Santander at 24% (I KNOW! TERRIBLE!). I got this loan last year when my credit score was 510.
My experian fico 2 (mortgage score) is now a 680. I wanted to lower my households debt to income so I applied for an auto refinance through USAA. They approved me for an 8% loan which lowered my payments almost $200.00. This is very helpful with my DTI ratio.
I am scared to go through with this however, as within the next 6 months to 1 year I would like to purchase a home and I have read the ref' will drop my score significantly.
The other issue is the loan currently list both me and my husband as the borrowers. He is just climbing into the 600 range, and I would be refinancing it out of his name in order to get the 8% interest rate. Thus, I am wondering the negative impact this will have on his credit as in the next few months we were hoping to have him in the 640+ range.
Any thoughts on whether or not refinancing is worth lowering the DTI?
What are your other two mortgage scores, and does the DTI change make a material difference for the given price range you were looking at for a house?
On paper it's a no brainer though if I had a 680 I'd probably be hunting elsewhere than USAA for an auto loan but that's me; that said, when we're talking mortgage trifecta, it's only EX that would be affected by the change in installment utilization (AAOA/Inq not withstanding) and if your loan is only a year old you won't be losing much, if anything actually with the way the calculations work.
Personally I'd do it and start saving the additional cash for closing costs and what not.
@Anonymous wrote:I know this has been talked about before but I wanted to gather new opinions.
I have an autoloan that is just under a year old, it is financed through Santander at 24% (I KNOW! TERRIBLE!). I got this loan last year when my credit score was 510.
My experian fico 2 (mortgage score) is now a 680. I wanted to lower my households debt to income so I applied for an auto refinance through USAA. They approved me for an 8% loan which lowered my payments almost $200.00. This is very helpful with my DTI ratio.
I am scared to go through with this however, as within the next 6 months to 1 year I would like to purchase a home and I have read the ref' will drop my score significantly.
The other issue is the loan currently list both me and my husband as the borrowers. He is just climbing into the 600 range, and I would be refinancing it out of his name in order to get the 8% interest rate. Thus, I am wondering the negative impact this will have on his credit as in the next few months we were hoping to have him in the 640+ range.
Any thoughts on whether or not refinancing is worth lowering the DTI?
Yes, refi the loan asap. $200 per month is a significant savings on one loan. Best to get away from Santander anyway.
You are far enough away from the mortgage application that you will be in much better shape. Besides, in mortgages DTI is extremely important. It is an excellent step toward preparing yourself to apply for a mortgage.
If your husband's score takes a dive and he doesn't have other installment loans, have him get one of those share secured loans for $500. It will help with his points.
Here is the link to find out about it: http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secure-technique/td-p/4506756
In the meantime he needs to spend some time in the rebuilding forum to get his score above 640 for the future mortgage. It can't hurt 
@Anonymous wrote:Also, he does have about 18k in student loans. Do these count towards installment dept, or would it still be good for him to get a different installment loan?
They count, so no need.
@Anonymous wrote:I know this has been talked about before but I wanted to gather new opinions.
I have an autoloan that is just under a year old, it is financed through Santander at 24% (I KNOW! TERRIBLE!). I got this loan last year when my credit score was 510.
My experian fico 2 (mortgage score) is now a 680. I wanted to lower my households debt to income so I applied for an auto refinance through USAA. They approved me for an 8% loan which lowered my payments almost $200.00. This is very helpful with my DTI ratio.
I am scared to go through with this however, as within the next 6 months to 1 year I would like to purchase a home and I have read the ref' will drop my score significantly.
The other issue is the loan currently list both me and my husband as the borrowers. He is just climbing into the 600 range, and I would be refinancing it out of his name in order to get the 8% interest rate. Thus, I am wondering the negative impact this will have on his credit as in the next few months we were hoping to have him in the 640+ range.
Any thoughts on whether or not refinancing is worth lowering the DTI?
It seems to me that refinancing to get rid of that awful loan is important economically.
Unfortunately, when you refi you will wind up showing a new loan with a large unpaid balance, so yes your scores will get dinged. How much, no one can say.
I think you should do it, and then just pay it down ahead of schedule, as fast as you can.
