OK, so someone, who is much smarter than me, needs to explain credit to me. Well, credit scores to be exact. I don't get 'em.
We talk to a friendly mortgage loan officer, who happily tells us we can get 6.5% on a 30-year fixed loan. "You have good credit, right?" "Yeah, pretty good."
So, later that day, our credit scores are run, and I get a call, "We got your scores back! They're awesome! I wish all our our clients had credit like this, this is really amazing." "Well, thanks. So, what kind of interest rate do you think we can get with scores like this?" "6.5%."
So what good does having excellent credit really do me. I've heard it talked about in a way that I was almost kind of expecting a, "With scores like that, you can practically write your own ticket," kind of response. Lenders should be fighting over us. (They're not, every single one of them is offering pretty much the same rate, which is getting higher by the freaking hour. Stupid market.) I mean, they should possibly even be offering us some kind of slightly illicit bribe or something. Obviously if the scores had come back lousy, I'd expect a, "Um, we're looking at like an 8.5% rate now, and your first born." But you mean to tell me with scores well over 800 we don't get anything better than someone who has 'good' credit? That just seems wrong. It seems like in the current market they'd really want to loan money to people with a track record of paying on time.
Unless, of course I want a 5% rate, which they'll happily give me it if I want to sign up for an ARM loan . . . 'cause yeah, that seems to have worked out so well for our country right now! I can't even watch financial news anymore, Greg's pretty much forbidden it, since I call to him from the other room on a nearly bi-minute basis, "The Dow is down 565 points!" "Now it's down 620!" "Holy crap, it's down over 700!" "Hon, watch the girls, I'm going to the store to buy more food storage. Possibly some guns."
4 comments:
LOL I love you, Hilary!
Case lot sale at our grocery store. Woohoo! I'm heading over on payday!
I don't get it either...we should take a class or something....
This has little to do with your credit score. The issue right now is that the bottom is falling out of the housing market. Home prices are plummeting. This means that when a bank looks at the house you want to buy, they are assuming it will be worth less tomorrow than it is today. Even though you have a good credit history and they assume you will pay off your loan they aren't willing to give you such a sweet deal since they don't want to be left with a devalued asset (your new house) if something causes you to default on the loan. Therefore they are going to charge you a higher interest rate (and likely require a bigger down payment) to help lessen their risk.
Banks are being conservative right now. The fact that you can get any loan at all is fairly remarkable in this market. And that fact should give you some pause - if a bank is nervous about giving someone with as good as credit as you a loan they must not think it is a very good investment - which means you should think twice about whether it is a good investment.
Having said all of that, if you are able to secure a buyer for your current home and are able to get enough money out to cover your original mortgage plus closing costs for both homes then this might be a safe move.
See Chris, this is what I meant about someone smarter than me explaining it better! Thanks!
Definitely gives us some pause . . . we talk out all the details of 'What the heck are we thinking?' at least five times a day. But, we have found an amazing house, for an unbelievable deal (short sell, selling for $70,000 less than any other house in the neighborhood, for basically what we'd sell our house for . . . of course, are chances of getting it are like 1 in 4 or so), and if we can get that, while getting something decent for our house, we end up way ahead, even if property values continue to fall. But, do we want to cash out $20,000 in equity to make this move. Of course, this is where we want to end up, in a house we could stay in for a LONG time, and we'll pay $20,000+ in fees whenever we move, whether now or in 5 years, so why not enjoy the house now rather than later. It's still way up in the air . . . we won't even have a decision from the bank for 6-8 weeks, and it'll take that long to sell our house if we can even sell it. Which is why we're moving forward with it all, having it written into our offer like 7 different ways that we can back out whenever we want. Decisions, decisions.
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