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Old March 19, 2017, 19:31   #1
clodhopper
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Pre mortgage prep question

I think after 17 years in the same house, it may be time to move. Grew up military moving every few years, so this is by far the longest I have ever been in one place.

To the point, looking at getting things in order before pulling a mortgage approval. I have pulled my credit report and will be getting my current house appraised soon. I am over 800. From my research, I understand it is best to not do any significant gymnastics in the short time before a mortgage review. However, I was schooled by my Pop years ago to drop the allowable credit limit on cards and such. He said that allowable limit counts against you. Don't have any revolving balance as I pay off stuff every month. As I have been static, I haven't paid much attention to the periodic limit boosts by the bank. Well the credit report totals my credit limits to almost 50k. My Pops voice in my head says to call and get those limits knocked down.

But before I make a mistake one way or the other, I call upon the financial wizards of the Files go help guide me on this.
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Old March 19, 2017, 19:40   #2
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If it were me, I wouldn't change anything. The 800 and zero balances tell all there is to know.
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Old March 19, 2017, 20:49   #3
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Well,

I would take nwobhm's advice. In addition I would do some backwards planning and find out what you want. How much do you want to spend? What kind of loan do you want? What interest rates you are thinking about?

These answers will help inform your decision.

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Old March 19, 2017, 21:29   #4
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Real estate or what? With 800 you should have a 50K credit card that you never use. Leave it alone. Now you have kicked yourself in the ass if you followed his advice. Your old man sounds like mine.
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Last edited by meltblown; March 19, 2017 at 21:38.
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Old March 19, 2017, 22:58   #5
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It may be interesting to note that the big three credit score companies expect to see high a high limit on your card the older you are. However they don't like to see a LOT of them. Keep your oldest cards (as long as the terms are beneficial to you) and ditch the rest BUT ONLY AFTER YOUR LOAN IS APPROVED.

Since you have an 800+ score there is no need to tweek it for the loan.

Oh and DO NOT be out buying/contracting for anything and don't move money around in your bank accounts before the loan has recorded and funded.
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Old March 20, 2017, 09:15   #6
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Now you have kicked yourself in the ass if you followed his advice. Your old man sounds like mine.
What I know is the paradigms of business change over time. What mattered greatly at one time may not now. Which is the reason for the question. Carrying too much available credit dinged you in my Pop's time. Apparently, not so much now.

Quote:
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Oh and DO NOT be out buying/contracting for anything and don't move money around in your bank accounts before the loan has recorded and funded.
No need to do that. Cars paid off, credit cards paid off, cash in the bank, no need to do any funk.
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Old March 20, 2017, 09:35   #7
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If you have a lot of credit available it's ok. They look at the amount available versus the amount being used. If you cut your available credit then the amount used vs available makes it looks like you are using more of your available credit.

Sorry, my dad used a lot of credit in his life and I followed suit, hence my high credit score. Over the past few years I don't buy anything unless I can pay cash though a mortgage and maybe a vehicle being the exception.
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Old March 20, 2017, 22:20   #8
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If you plan on converting any hard assets (such as guns, ammo, precious metals, cars, collectibles) into cash for a down payment, be sure to do it sooner rather than later AND make sure you can provide a complete paper trail for everything (titles, bills of sale, copies of cashier checks, wire transfer records, etc). Bankers just HATE it when people keep assets outside of The System, and your lender will want a pile of documents showing the source of ALL funds that you bring to closing. In addition, they will want it to have been sitting in a standard bank account for at least 60 days, preferably longer.

If you want to have some fun, just watch the look on your loan officer's face when you tell him that you raised half of your $60K down payment by selling off some guns and gold coins at the swap meet, and that the rest was cash on hand. As far as they are concerned, you might as well be peddling oxycodone to high school kids.
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Old March 20, 2017, 23:06   #9
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Quote:
Originally Posted by Peconga View Post
If you plan on converting any hard assets (such as guns, ammo, precious metals, cars, collectibles) into cash for a down payment, be sure to do it sooner rather than later AND make sure you can provide a complete paper trail for everything (titles, bills of sale, copies of cashier checks, wire transfer records, etc). Bankers just HATE it when people keep assets outside of The System, and your lender will want a pile of documents showing the source of ALL funds that you bring to closing. In addition, they will want it to have been sitting in a standard bank account for at least 60 days, preferably longer.

If you want to have some fun, just watch the look on your loan officer's face when you tell him that you raised half of your $60K down payment by selling off some guns and gold coins at the swap meet, and that the rest was cash on hand. As far as they are concerned, you might as well be peddling oxycodone to high school kids.
That's a very valid point you make. I wish I'd known this in 2009 when I bought my house. The shear hell I went through to verify the $3,500 my father gifted to me to the FHA was almost not worth the house I bought. Bankers do get antsy about such things!
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Old March 21, 2017, 20:07   #10
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I'm going through this now. A couple of years ago when I almost bought another property the only thing they dinged me on was the balance on my credit card. I put everything on the card to get the points, but pay it off every month. It still looked like I had a heck of a balance on the card, did not matter that I paid it of every month. This time, I started paying the balance a couple-three days BEFORE the closing day on the card. Now I show an average balance of $91 on my CC.
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Old March 22, 2017, 00:16   #11
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After 17 years, unless the house and neighborhood is sux and danger, why not just stay 13 more and pay it off, unless you are downsizing.
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Old March 22, 2017, 09:30   #12
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After 17 years, unless the house and neighborhood is sux and danger, why not just stay 13 more and pay it off, unless you are downsizing.
Looking to go from an average suburban house on a postage stamp in town to a smaller house on ~30 acres well outside of town but shorter drive to work.

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Old March 27, 2017, 21:51   #13
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Just bought a new house a couple years back. Credit score was around 770-780 at the time. Had probably a $75,000 credit limit at the time AND was using $25,000 of it at the time (yes, a shitload). Still got a very low rate and zero trouble getting the loan.

Do not worry about your credit limits - you are in the clear !
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Old March 27, 2017, 23:13   #14
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Credit utilization rate is important so it's actually better to have higher credit limits as long as you aren't carrying a huge balance.

Don't be tempted into an adjustable rate mortgage. Rates only have one direction they can go. If you can afford it I'd go for a 10 or 15 year fixed rate.
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