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mommy9298's Message:

We have financed three times. We always needed an appraisal. Id get it done if your rate will be low.

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Discussion Review (newest messages first)
2teach2 01-11-2021 08:15 PM

Thank you, everybody, for taking the time to respond. What several of you said about how paying off loans can affect our credit in a negative way makes sense.

Gromit 01-11-2021 12:33 PM

If you paid off your car loans, your credit available ratio probably changed.

If you have $20K available on a CC and have used $10000, and you have 2 car loans of $20K and only $1000 left to pay on each, you have $60k open but are only using $12000.

12,000:60,000 is 1:5

When you paid off the car loans, you now have $20k available and have used $10k.

10,000:20,000 is 1:2

At least that's how I remembered it being explained to me as I was closing credit cards that I never used. I don't know for sure that it works the same as loans, but I wouldn't be surprised.

And I agree that I would pay the $345 if that's the only thing stopping you. I highly doubt rates are going to go significantly lower. How much lower can they realistically go?

hand 01-11-2021 12:19 PM

I wouldnt be surprised if paying off the car loans is what changed. Our credit score is over 800 but recently went down. Our house is paid off. We recently paid off my car which was the only car loan we had. We charged a lot but always pay it off when we get the bill. But our credit rating went down.

I agree that you should take the low interest rates while you can. No one can predict where the rates will be in a few months.

amiga13 01-11-2021 11:13 AM

Originally Posted by MalloryJames
My understand is it isn't not having debt that can damage your credit rating--it's having so few lines of credit open and having a good payment history.
Thinking back, you’re absolutely right. To rectify my denial, I spent several thousand dollars and used my Macy’s credit card. Then I was approved right away.

And for those of you who are like me and think it doesn’t matter because you have no debt, all I was trying to do was get a new Social Security card. SSA did a credit check (because only real people have debt???) through Experian. I have an 828 credit rating, but I was denied a new SS card because of no debt. Creating a debt worked and I got a new card (and the furniture I’d intended to buy on my debit card).

For me, all’s well that ends well—I even found my old SS card so now I have 2. And OP, I agree that an appraisal is a small price to pay for today’s historically low interest rates.
MalloryJames 01-11-2021 10:57 AM

My understand is it isn't not having debt that can damage your credit rating--it's having so few lines of credit open and having a good payment history. With closing out 2 car loans, there went that payment history. It's complicated!

I think $345 is a small price to move forward if the new loan is better for you--and I assume it is or you wouldn't be doing it! Best luck!

mommy9298 01-11-2021 10:38 AM

We have financed three times. We always needed an appraisal. Id get it done if your rate will be low.

teachnkids 01-11-2021 10:23 AM

I know someone in banking/mortgage. They have been saying grab while you can
Rates are not going to stay this low.

The money for any appraised is frustrating, bit if the rate goes up you'll be paying more than that!

MathWA 01-11-2021 10:14 AM

We advised son to refinance and he recently locked in at under 3%. Rates have never been this low during 40 years of our home ownership. IMHO you should not wait because they will probably go up and this could end up costing you a great deal of money. Sorry..but I dont agree with your hubs.

NJ Teacher 01-11-2021 08:35 AM

If the appraisal fee is all that is separating you from the loan and you and the bank feel there will be no issues with that, I would go for it if the terms of the loan are favorable to you now. With all the tumult in the country, who knows what will happen in a few months, and by then, you will have several months of payments behind you.

Good luck with it all. I had a 20 year mortgage I thought about refinancing years ago, but the process was so daunting at the time, I just stuck with what I had. If you do decide to wait, you could always make additional payments to the principal to pay down the loan faster. It is interesting about credit scores and what affects them.

amiga13 01-11-2021 08:22 AM

From my own experience, I learned that I have to be careful making changes to my credit. Paying off loans and closing credit cards aren’t always positive. I was denied approval because I had no debt. Watch your triggers—they don’t always work the way you’d expect them to. Apparently being in debt makes one reliable in the eyes of credit mavens. Good luck.

2teach2 01-11-2021 07:08 AM

Happy Monday, everybody! We are in the process of refinancing our home. We started the process back in November with our current loan company, thinking the process would be easy. We provided all documents quickly, had an appraisal waiver,and they had given us a projected closing date of January 4. Last Wednesday we received an email from them saying we had been approved and they would be calling us to schedule someone to come out with the loan docs for us to sign. Then, on Thursday, we received another email saying that our approval had been denied by Freddie Mac, but we were still approved by FMNA, but they wanted us to have an appraisal at the cost of $345. I, of course, called and talked to them and said that, if anything, our credit should have improved since we paid off two cars last month. They had no answer for why this happened. Has anyone had a similar experience? We were so close to getting this done, and now this setback has come up. DH wants to just call off the process and wait a few months after the inauguration to see how interest rates go. Any experiences, thoughts, opinions?

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