AboutRon Bauer Expertise Whether you have great credit or think you are the most credit challenged person on the planet I can help you with mortgage related questions about purchasing a home, investment property, refinancing, or doing some debt consolidation. I also specialize in helping those needing credit repair or creative financing when purchasing a home. Additionally I work with many second home and investment property buyers in a variety of States. My clientele is mainly west coast (California, Colorado, Nevada, Utah, Arizona...), but I lend in all 50 States and will do my best to answer any question you may have on any conventional, FHA or VA loans...
Experience Experience:
Sr. Residential Mortgage Lender of a National Bank specializing in "residential" mortgages including FHA/VA loans and investment property strategies. We process, underwrite, and fund in house for most of the big named companies and then some...
Expert: Ron Bauer Date: 7/5/2008 Subject: totally lost
Question Hello Ron,
Here’s life situation
Just finished school with 17, ooo student loans=
School teacher with about 50,000 yearly income
65K combined with wife
Barely made first credit purchase -19,000 Auto (didn’t think visa and college would work together)
My credit score was 648 but I have no actual credit history other than a $700 credit I paid off in two months
I want to build up my credit so I can purchase a home in the next year or two. I'm trying to pay off my auto loan in the next year, but I was told this is not a good idea. Is this true?
Since I have little credit I’m getting killed on this interest, I was trying to pay it quickly
+ My bank offered a refinance with half the interest if I have a co-signer. If I take it, will this hurt my credit? They told me I could refinance by myself in 8-9 months. Should I stick it out and do it on my own?
Any advice about the best route to get into a home would be greatly appreciated
Josue
Answer Josue,
Thank you for contacting me with your questions. To establish credit you need between 3-4 open lines of credit. You auto loan counts as 1 and your student loans (however many there are) count too. So by making these payments on time you are building good credit. If you are younger and never had any credit before it will take about a year of payment history to establish a higher credit score.
I am not sure how many student loans you have, but if it is only one then you should consider getting 1 or 2 credit cards, use them once or twice on small purchases then pay them off. This will establish another tradeline to score off of. You need credit to have a good credit score, but don't over use it!
Paying off your car or refinancing to a lower payment will not adversely affect your credit score. Paying off or lowering the payment will only help you when it comes to buy a home.
Keep in mind when qualifying with pay stubs, W-2’s, and your current debts which include mortgage payment + monthly property taxes + monthly insurance and/or HOA + all your monthly debts on your credit report cannot typically exceed 42% of your gross monthly income. So by having less debt you can qualify for more of a house payment.
