Am I on the right path?

[apsman]

Hello, I am a long time member but I have been away for a long time. I am looking for some advice or just opinions that I am doing the right thing!

 

To start I am looking to buy a home by the end of the year!

 

My Current Situation:

AMEX: Opened Feb 2012 / Balance $0 / Limit: $6700 / One 30 Day Late Payment

Barclays: Opened Oct 2019 / Balance $387 / Limit $1000 / No Lates

Capital One: Opened Dec 2010 / Balance $202 / Limit $5750 / One 30 day(Feb 2019), One 60 Day Late (March 2019)

Discover: Opened June 2020 (0% Balance Transfer) / Balance $9343 / Limit $9500

Kohls/CAPONE: Opened Oct 2016 / Balance $0 / Limit $3000

 Merrick Bank: Opened June 2011 / Balance $0 / Limit $3300 / 30 Day Lates (Oct & Nov 2018) - 60 Day Late Dec 2018 - 90 Day Late Jan 2019

Nordstrom: Opened Nov 2012 / Balance $0 / Limit $5800 / No Lates

THD/CBNA (Home Depot) Opened June 2011 / Balance $2000 / Limit $6000 / No Lates

CLOSED: PNC Credit Card Opened Jan 2016 / Closed Dec 2018 Legally Paid in full for less than the full balance Lates: (2017) Aug 30days - Sept 60days - Oct 60 days- Nov 90 days (2018) Jul 30 days - Aug 60 Days - Sept 90 Days - Oct/Nov 120 Days

CLOSED: SYNCB/LAZBOY: Opened DEC 2014 Closed Oct 2017 Good history no negatives

CLOSED: NOT REPORTING NOW: Credit Union CC Balance $8500 with late pays (I am sure this will show up when i least expect it)

 

 AUTO Loan:

US BANK Opened April 2020 Good History

- I have 5 closed Auto Loans with perfect history

 

Student Loans:

- Balance $7410 Good History

- Balance $6165 Good History

- CLOSED: Good History

 

Personal Loans:

- CLOSED: One Main Financial this loan was paid in full in 3 months!

 

401k Loan:

$9500 - Auto Pay through pay checks does not show on credit report

 

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Now you know my current situation: I just did the balance transfers on the Discover and it has increase my FACO score a large amount. I am thinking of taking a personal loan from my bank to pay off my 401k loan. I would then be able to take out a larger loan to pay off all my revolving debt and have it automatically taken from my pay checks at a 5% interest rate. I would normally leave the balance on the discover card at 0% but that ends in 14 months which I do not know if I would have it paid off in time. As I said i am looking to buy a house before the end of the year. Should i go forward with this process?

 

Why I am thinking of the 401k loan...

1) I like the idea that I have a very low interest rate and that interest actually goes back into my 401k

2) I know the debt will be paid off in 60 months

3) If god forbid i lose my job the loan is paid off by my 401k (I know this sucks but it does protect me)

4) this will clear up my credit report of debt and maybe increase my credit score more

 

I have a plan in place to not run up credit cards again. we are living will within our means now and not running up debt but actually slowly paying it off with high interest. It will go even faster with low interest rates! The way I figure I will be saving an average of $400 a month in interest alone!

 

Please give me your honest opinion on what I should do!

 

-Apsman-

 

[shifter]

Yes if you actually have changed your ways and are living within your means, do anything you can to get the interest lower on existing debt including a 401k loan. The risk of course is if you fall off the wagon and now you have the CC debt and the 401k is tanked.

 

As far as buying a house, do you have a 3-6 month liquid emergency fund? If not, I would prioritize that before you buy a house at a very high interest rate and PMI because that's what you're looking at with your credit profile.

 

Honest opinion is it sounds kind you're on the right track, but just continue that way and let the house buying wait until you get into a better financial place in a couple of years. 

[PhoenixDown]

When buying a house, they will see you have a 401k loan and will factor that in.

[swimmingwithsharks]

Does the house have to be purchased at the end of this year? 

 

More time will help you pay things off, be sure you stay on the wagon, and help the sting of those lates to fade.