November 7, 2019 at 8:58 am #62018
I am in the process of paying down my remaining credit card balance and saving for my MRF. In order to save enough for my MRF by May/June I was considering doing a credit card balance transfer so I can pay the minimum balance and put the rest (approx $2,000/month) to savings. The total amount is 6,800 with an interest rate of 21%. I currently have an offer from an existing account to do a balance transfer for 0% for 12 months. Would this be an issue if I am technically not opening up a new account? If I put the whole balance 6,800 on this card the total utilization for this card would be about 88% ( very high) if that also makes a difference. Overall my DTI including my rent and other debts (student loans and car payment) is 22%. Hopefully this information is relevant and if there is something else I should consider please let me know. We are trying hard to be approved and closing on a house by the time the new school year starts in September.November 7, 2019 at 9:28 am #62021
Credit score and credit utilization do not matter. So whether you have 80% total credit utilation or 12% or one card maxed out and 3 others with zero has no effect. The only thing they look at on your credit report is payment history. If you can show you have paid all of your bills on time without fail for 2 years then you’re golden. If you have negative remarks like a foreclosure or repossession (I had both 5 years prior to getting NACA qualified) then you will need to produce documentation that you are out of the weeds.
The only thing NACA will advise consistently is not to take on more debt. They will always advise lowering your debt if possible. So the balance transfer gives you either a lower monthly payment or less interest then you should be fine…as long as you heavily document everything. You will probably need to show all of your statements and balance transfer emails and letters and things like that.
As far as your DTI…not getting into your finances but 22% total is very low relative to your income. Are you sure you did the math right? In my area rent is more expensive so rent alone is around 30+% for everybody unless they have multiple roommates splitting the bill 3 or 4 ways.
September 2020 is doable. Is your goal May/June because of your intake? I would plan on 2-3 months between making an offer and closing. Good luck with everything!November 7, 2019 at 9:34 am #62024
No, this usually is not an issue but before doing this you definitely want to talk to your MC first and explicitly explain what you are doing. I know of other members on here who have done this, or done similar things (myself included) to help you better manage your debt.
In general, if you open an account to consolidate debt and/or reduce your monthly mortgage payments with lower interest, that will not count against you.
But always talk to your MC first before doing anything like this!November 7, 2019 at 9:37 am #62025
Thats a relief on the credit utilization – the idea of paying such a high interest rate while putting my money to saving for my MRF kills me. May/June goal is my own of when I will hopefully have my full MRF saved.
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