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Mortgage/Credit Score

Discussion in 'General' started by Gorilla George, May 13, 2021.

  1. I know there are some financial people on here; I need a little input.

    I know a factor in your credit score is your "credit age". The mortgage is my longest credit history. I bought that house like 12 years ago. My question is, would it look better (credit wise) to have the house paid off, or to keep the long-standing credit history?

    I feel like I need a new car. I never pay cash for vehicles, for several reasons. I could pay my mortgage off now. BUT...if having that paid off will lower my credit score, then I might be better off to just keep making the payment until I get the new car, then pay it off right after.

    My score was over 800 when I got Jagger 2 years ago, so I assume it is a little higher now. If paying the mortgage off will lower my credit score, will it drop it enough to matter? Like, would it drop it enough to put me in a lower "tier" when it comes to the interest rate on the new vehicle?
  2. Mongo

    Mongo Administrator

    Why does a high credit score matter given how you spend? If it does drop you then buy the car for cash, but overall if you're paying your car loans and they're for those kinds of cars you'll be fine.
  3. BigBird

    BigBird blah

    IIRC, anything over 740 is fantastic, and even 700+ will get you the good rates with some haggling. almost 40 vehicles later, i've spent a bunch of time in the dealership with me in various scenarios. I think score matters most in a lease, but even in a finance, you can get top tier financing without the highest score.
  4. In the grand scheme of things, it doesnt really matter. But I wasnt sure how it all worked. If dropping my mortgage meant my credit score dropped...which meant my interest rate on the car would be higher, then Ill just make the minimum mortgage payment till after I get the car.

    If it doesnt matter (wont change it, or not enough to make a difference), then ill go ahead and pay it off and be done with it.
  5. HPPT

    HPPT !!!

    I think you have to balance that out against the interest rate you're paying on a mortgage signed 12 years ago. I don't remember what the interest rate environment was back then but I'm guessing there is a very good chance it was higher than it is now. So, do you want to keep paying interest on a house so you can have a lower interest rate on a car? You need to plug in some numbers.
  6. Ah ok. So even if it does drop it, it wont drop it 80 points or no shit like that. So it shouldnt matter.

    I dont do any haggling in dealerships. I usually dont even visit them till I pick up the vehicle. I do it all over internet/email.

    Ill "build" the car online and send the order in. Then when it comes in ill go to my bank and they give me a blank Cashiers check up to the amount I request. I typically do it for the entire amount (MSRP, taxes, etc) without figuring my trade-in. That way it doesnt matter how things go. I dont have to argue with dealers, dont have to mess with their financing, i dont even need to know the final price until i get there. Hell, I dont even have to trade my current car in if I feel like they are fucking me around.

    The best part is that if things do get ugly, i can use the check as leverage. The check isnt made out to anyone, it is blank...and only I know what amount it is approved to. I can go buy anything I want with it. So if they get shitty for some reason, i can be like "I dont have to buy this car. I can take the check across the street and buy one from them". :D
    BigBird likes this.
  7. Shit. Good call. I didnt think about the extra interest I would pay on the house in the meantime.
  8. Kris87

    Kris87 Friendly Smartass

    To answer your question, it doesn't matter either way what you do with your mortgage. It's not going to affect the rate you get.
    Gorilla George, BigBird and Phl218 like this.
  9. Thanks, that’s good to know.

    If that’s the case, then I’d be better off eliminating the mortgage now to stop that interest.
  10. rwdfun


    As Randy Moss once said.

    Straight Bitcoins homey
  11. HPPT

    HPPT !!!

    You pay most of the interest in the early years of your mortgage anyway. As you near the end of it, you're mostly paying back the principal. How many years you got left?
    BigBird likes this.
  12. SuddenBraking

    SuddenBraking The Iron Price

    You're probably paying about 3 or 4 points of interest and the market is up seventy gazillion percent this year.

    Keep the mortgage.
  13. Past Glory

    Past Glory Well-Known Member

    You're really going to allow a single point drop in this competition? Treat that credit score like a motherfucker stepping up to you on the next elliptical. Win... just win, baby!
    Gorilla George likes this.
  14. TurboBlew

    TurboBlew Registers Abusers

    with a 3% rate mortgage I would not be in a hurry to pay it off. Maybe some extra princpal payments for a few years on the front end to get the loan shortened by 7-10yrs on a 30 year term.
    Matt.S, Boman Forklift and auminer like this.
  15. notbostrom

    notbostrom DaveK broke the interwebs

    is your mortgage large enough to afford a tax deduction above the standard deduction? Use an equity line to buy the car for a lower rate and tax deduction? and 740 is NOT a good credit score shoot for something closer to 775 or higher. It affects your insurance rates as well for every type of insurance. Google what your credit score effects and you'll be amazed.
  16. shakazulu12

    shakazulu12 Well-Known Member

    Short answer from a mortgage guy is you are fine regardless most likely. People get too far into the weeds with credit scores. With all the vehicles you lease etc, you have plenty of pay history to keep a high score. Your scores will take a hit for a month or two when you get another car, then rebound as you make payments. Constantly running it for consumer debt will hurt you a lot more than paying off your house. Your house payment history will stay as a positive long-term account for many years on your report, after you have paid it off. True, it does "age out" eventually, but you are showing current pay history as well.

    Now go buy a bouncing Lambo.
    BigBird and Gorilla George like this.
  17. gixxerboy55

    gixxerboy55 Well-Known Member

    Make double payments on the mortgage,then in the future you can use that money to invest.
  18. There are still 18 years left on the mortgage. Over the last couple of years I’ve been sending an extra $3-$5k each month just to get it paid off.

    I want to be more flexible as far as where we live, and didn’t want to have to worry about a mortgage.
  19. SuddenBraking

    SuddenBraking The Iron Price

    That’s prolly a really bad financial decision.

    PM me if you want me to run the numbers and show you how much more money you’d have if you’d have invested that $50K/year vs paying down your mortgage.
  20. Not worried about the tax aspect of it. Technically, I pay taxes to Ghana. My Ghana tax liability is much higher than my US liability. So what my company pays for me to Ghana more than offsets my US liability. I end up with a foreign tax credit rollover every year.

    The mortgage company is always sending me those Equity Line of Credit things in the mail. I don’t want to do that. I want to eliminate the mortgage altogether.

    IIRC, when I got Jagger my credit score was either 808 or 809. I know it wasn’t over 810, that would be easy to remember.
    That was a little over 2 years ago.

    I’m sure it’s higher now. I haven’t missed a payment on anything since college, and every year Amex raises my credit limit, even though I don’t ask for it.

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