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RobEvans

Refinance rate shopping, total utilization and 401k-loans

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I'm thinking about refinancing if interest rates get down a bit lower. Currently I'm at 4.75% and hoping for 3.75%, so I'm trying to be ready for if/when that is possible.

 

My current Equifax FICO® Bankcard Score 8 is 765 according to my Citibank Costco card which provides this score. It says my "Proportion of balances to credit limits on bank/national revolving or other revolving accounts is too high " and "amount owed on revolving accounts too high." I have two cards running about $20k in balances on 0% balance transfers which is why it says this.

 

1. I could take a 401k loan and pay off all of these cards, and then I'd be paying interest to myself. If I did that, would it improve my credit score and get me a better interest rate? Would this likely mean I'd end up getting a better mortgage refinance rate? Do 401k loans count towards your credit card utilization? Would it even help me at all to have a higher credit score than 765?

 

2. I'd like to apply to three different places to see who can get me the best rate. I have maybe 25% equity. Where should I apply? I'm

thinking about Costco Home Finance and my local credit union. Any other places I should look?

 

 

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are you sure refi costs justify all the work versus just paying additional principle to get it paid off?

 

I would never take out a 401k loan for this or any other reason.

 

you need to learn your mortgage scores (myfico.com sells them) before you take any action to "improve" your scores.

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Look at Zillow Mortgage Rates and call the three places with the best offers.  You do not need to apply to discuss pricing.

 

https://www.zillow.com/mortgage-rates/

 

How many years do you need to pay off the house?  If you are refinancing consider a 15 or 20 year loan.

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I'm a loan officer, and based off of current interest rates, YTD, as well as the fed announcing that they're not anticipating to hike rates for the remainder of the year, 3.875% in the near future doesn't look likely.

 

I copied & pasted the "back-end" lender rates below. This is called "raw pricing", before there are any margins added and passed on to the consumer. Based on today's rates, the "par" rate is 4.125%, and your target rate of 3.875% has a cost of $970 for every $100k borrowed just to get to par.

 

Fannie 30yr Fixed (04/19/19)

Rate            30-Day Lock

3.875%               .970

4.000%              .548

4.125%              (0.027)     

4.250%             (0.597)

4.375%             (1.102)

4.500%             (1.573)

4.625%             (1.897)

4.750%             (2.036) 

4.875%             (2.605)

5.000%             (2.877)

Edited by seanote

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