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thinking about refinancing. Should I pay off and stop using credit cards?
Posted on 3/2/15 at 11:04 am
Posted on 3/2/15 at 11:04 am
I have 3 credit cards that I rotate between for points. I pay off the balance every month so I never pay any interest. Should I pay these off in full and stop using for a couple of statement periods?
Discover says my fico is 756, but I know the lenders will also look at my credit card utilization and debt to income.
My primary reason for refinancing is to get rid of PMI. I don't plan to be in my home longer than 5 years.
Discover says my fico is 756, but I know the lenders will also look at my credit card utilization and debt to income.
My primary reason for refinancing is to get rid of PMI. I don't plan to be in my home longer than 5 years.
4
Posted on 3/2/15 at 11:31 am to LSU6262
quote:
Discover says my fico is 756, but I know the lenders will also look at my credit card utilization and debt to income.
Credit card utilization is covered within the FICO, I'm fairly certain.
Debt to income is a legitimate concern.
I don't think it matters if you pay them off and stop using them or continuing to use them and pay them down to zero every month.
quote:
My primary reason for refinancing is to get rid of PMI.
I don't understand - either you've got sufficient equity in the home or you don't. If you do, you can ask them to take the PMI off - if you pre-paid it, you're probably not going to get it back.
I don't see how refinancing is going to help - unless you're going to get a rate reduction (which would be the primary reason to refi).
quote:
I don't plan to be in my home longer than 5 years.
I wouldn't refi unless it's streamlined - you have to recoup all of your closing costs to make even 1 penny on a refi - you're within the window now that I would direct more principal only payments, than anything like refinancing - unless your current interest rate is like 6% or better, then you'll be able to claw back some of those costs with a 3 1/2 to 4% APR.
Posted on 3/2/15 at 12:59 pm to Ace Midnight
quote:
I don't think it matters if you pay them off and stop using them or continuing to use them and pay them down to zero every month.
I pay off the statement balance every month. So, that balance is reported to my credit. I'm talking about paying it off to show 0% utilization before applying for refi
quote:
I don't understand - either you've got sufficient equity in the home or you don't. If you do, you can ask them to take the PMI off - if you pre-paid it, you're probably not going to get it back.
I don't see how refinancing is going to help - unless you're going to get a rate reduction (which would be the primary reason to refi).
original loan is FHA. I have to be in home for 5 years AND be at 78% before PMI can be removed.
Lender is telling me that because my score is above 720 I can refi it without PMI and closing cost would be around 2500. They are also saying my rate would be the same (3.75%)
Posted on 3/2/15 at 1:25 pm to LSU6262
If you are paying PMI quit playing games with the credit cards and pay down your mortgage to get rid of PMI.
That is money out the window.
These stupid reward cards are a trap. Settle on a good cash back card---I like the 2% cash back on every purchase from AMEX and Fidelity Investments and never, ever carry a balance.
Credit ratings are stupid goal too. Your credit rating will be fine if you pay your bills and manage your debt. Don't worry about it beyond that. It's not like it is a trophy or something. (You know your credit rating will go down if you quit using debt. Isn't that ironic?)
That is money out the window.
These stupid reward cards are a trap. Settle on a good cash back card---I like the 2% cash back on every purchase from AMEX and Fidelity Investments and never, ever carry a balance.
Credit ratings are stupid goal too. Your credit rating will be fine if you pay your bills and manage your debt. Don't worry about it beyond that. It's not like it is a trophy or something. (You know your credit rating will go down if you quit using debt. Isn't that ironic?)
Posted on 3/2/15 at 1:31 pm to LSU6262
quote:
Lender is telling me that because my score is above 720 I can refi it without PMI and closing cost would be around 2500. They are also saying my rate would be the same (3.75%)
You going to save at least $2500 off the PMI if you refi?
Because that's the only dollars you make ($2500 is a wash and less than that is a net loss) - and you have to make them in 5 years.
This post was edited on 3/2/15 at 1:32 pm
Posted on 3/2/15 at 1:53 pm to Ace Midnight
quote:
You going to save at least $2500 off the PMI if you refi?
Yes
Posted on 3/2/15 at 4:12 pm to I B Freeman
quote:
If you are paying PMI quit playing games with the credit cards and pay down your mortgage to get rid of PMI.
That is money out the window.
These stupid reward cards are a trap. Settle on a good cash back card---I like the 2% cash back on every purchase from AMEX and Fidelity Investments and never, ever carry a balance.
Credit ratings are stupid goal too. Your credit rating will be fine if you pay your bills and manage your debt. Don't worry about it beyond that. It's not like it is a trophy or something. (You know your credit rating will go down if you quit using debt. Isn't that ironic?)
Bingo we have a winner. Too many people are worried about there FICO and credit score.
Posted on 3/2/15 at 4:40 pm to I B Freeman
quote:
If you are paying PMI quit playing games with the credit cards and pay down your mortgage to get rid of PMI.
quote:
These stupid reward cards are a trap. Settle on a good cash back card
LOL - Should he quit playing games with cards and pay down his mortgage or get one with 2% cash back???
OP - just refinance, not using your cards for a couple of months isn't going to raise you score enough to get a better rate - or call your current mortgage company if you are above the 20% threshold and have it removed.
This post was edited on 3/2/15 at 4:44 pm
Posted on 3/2/15 at 4:57 pm to I B Freeman
quote:
If you are paying PMI quit playing games with the credit cards and pay down your mortgage to get rid of PMI.
That is money out the window.
I use the 3 different cards to maximize my reward points. I never carry a balance.
Posted on 3/2/15 at 5:29 pm to LSU6262
What's really ridiculous about Freeman's post is he is implying that by not using credit cards, the OP would somehow have more money, money he could use to pay off the PMI.
That's not how it works if you aren't a moron.*
*Of course there are people who are wildly irresponsible with Credit cards.
That's not how it works if you aren't a moron.*
*Of course there are people who are wildly irresponsible with Credit cards.
This post was edited on 3/2/15 at 5:30 pm
Posted on 3/2/15 at 9:06 pm to LSU6262
I've been told one way to deal with the credit card/credit score BS is to go into the account and pay most or all of the balance before the monthly close. You still get your points but your monthly balance doesn't hurt your credit score.
Posted on 3/2/15 at 9:40 pm to LSU6262
Pay extra on your cards so that you have a credit as your balance, that really screws with the FICO scores
Posted on 3/3/15 at 6:50 am to LSU6262
quote:
I never carry a balance.
Yes you are.
Posted on 3/3/15 at 7:45 am to Socrates Johnson
To the OP:
If the minimum calculated payment on the balance that shows up on the credit report means that you won't qualify for a mortgage then you need to rethink your financial situation because you are living way to close to the edge.
I always have a balance on several of my cards. I pay them in full monthly but I also use them so there is always a balance going forward. I just don't pay interest on them by paying the statement balance in full each month. The only way not to have a balance showing on a credit report is to not use the card and maintain a $0 balance.
If the minimum calculated payment on the balance that shows up on the credit report means that you won't qualify for a mortgage then you need to rethink your financial situation because you are living way to close to the edge.
I always have a balance on several of my cards. I pay them in full monthly but I also use them so there is always a balance going forward. I just don't pay interest on them by paying the statement balance in full each month. The only way not to have a balance showing on a credit report is to not use the card and maintain a $0 balance.
This post was edited on 3/3/15 at 7:46 am
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