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Thank you for your inquiry. It’s difficult to give you direction without having knowledge /understanding of your complete financial picture along with short term and long term financial plans and goals. That said, I would certainly recommend comparing the benefit you are achieving by buying-down the interest rate (my surmising) to the cash you would be saving by paying off the credit card (i.e. eliminating the carry-cost of the credit card). A certified accountant and/or financial planner would be excellent resources to consult with time permitting. Short of that, you should certainly address the question to your loan officer.
thanks again for your inquiry and vest of luck!
Stu Hall
NMLS #137009
301.526.8612
You need to ask the same questions of your loan officer. It’s smart to get a second opinion on here but like Eric said we don’t know quite enough. We can make some guesses though. How close to closing are you? Where in the loan process are you? The scores are good and I can tell you if it’s an FHA loan raising the score won’t get you a better rate. Conventional loans will but you have to consider risk versus reward. If you are going conventional you need reserves in the bank to get a loan so keep that in mind. At least two months. Again talk to your LO and ask these types of questions. Again Eric nailed it for you. All points should be considered by cost versus savings and length of time to recoup investment of funds. If it takes 8 years and you’re gone in 5 then don’t do it. Hope this helped and good luck.
Thanks,
Brent Mendelson
Senior Loan Officer
Monarch Mortgage
600 Jefferson Plaza, Suite 400
Rockville, MD 20852
240-403-1970 Direct
301-412-0259 Cell
http://www.monarchmtg.com/bmendelson
nmlsr#111407
This always seems to be the hardest question to answer. However and without knowing all of your information I would recommend holding onto your cash. Putting $500.00 or so towards your existing credit card balance is not likely to have much of an affect to your credit score. Additionally, the $500.00 would not go very far at all towards buying down your interest rate. You would be surprised to see how little of an effect .125% has to your monthly payment. I certainly hope this has helped you with your decision. If you would like to discuss your situation further, I can be reached at any one of the numbers mentioned below. Best of luck and Happy New Year.
Warmest Regards,
Michael Parsons
Chairman/Mortgage Banker
Apex Home Loans, Inc.
3204 Tower Oaks Blvd., Suite 400
Rockville, Maryland 20850
(Direct) 240-268-3053
(Cell) 3010-440-3864
Answer #1
Your question is a hard one to answer as I don’t know your entire situation. Any payment to your husbands credit cards will not affect his credit score immediately. I don’t know what bank you are working with so I can’t speak to their credit score requirements and if a score higher than 710 for your husband will make any difference in your rate. You should talk with your loan officer to better guage if this is going to make a difference. My guess is it won’t be a big difference on your rate either way. In the long run, paying down your debt might be wise if your credit card interest rates are higher than your savings account rate. You should always keep some amount in your savings for emergencies but might look at paying down your cards as well. You should talk to a financial planner about this. Mortgages usually require money in the bank for refinances to act as mortgage payment reserves in the case your income is interrupted after settlement. They want to be sure that you have the means to continue making your mortgage payments while finding new work. Again, you should talk with your loan officer to determine if your CHIP loan has such a requirement. Lastly, paying points might make sense as long as the monthly savings you are getting from the lower rate offsets the cost of the points to get the lower rate in a reasonable time period. For instance, if it costs you an additional $1000 for $10 monthly savings, your break even point is in 8.33 years. If you are moving in 5, this doesn’t make sense. In contrast, if the cost is only $100 and you save $10 per month, your break even is in less than 1 year giving you 4 years of savigns. Hope this is helpful.
Eric Strasser
NMLSR# 111971