How long should you wait after paying off your credit card to get prequalified for a home loan?

Asked by annmarie369, Phoenix, AZ Tue Oct 15, 2013

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16
BParker, CPA*, , Scottsdale, AZ
Tue Oct 15, 2013
Hi AnnMarie369:

With the additional information you provided it is an easy answer. Congratulations on paying the card off each month and not incurring the interest charges. All you have to do now is get the balance down to about 7-10% of the credit limit you have for the card (gets you the maximum credit score factor); your credit report will show it at that level within 30-60 days (depending on when it the lender's reporting cycle you are); and; you are good to go.

I recommend people like yourself, however, who know they are going to be buying a home, get in to see your lender about six months before you wish to close. The sooner the better as you sound almost ready. You would not believe how many otherwise well-qualified prospective homebuyers have some little dings on their credit reports which take time to correct. If you wait until you are ready to buy, you end up either paying higher costs to get rapid results or you end up paying a higher interest rate than you otherwise would have.

Once again, give my team a call or email us and we can work to obtain the best results for you and your particular situation.

Bill Parker, CPA*
Parker Gale Team
Sr. Loan Officer
NMLS #223607
*Licensed, no longer practicing

15730 N. 83rd Way, Suite 103
Scottsdale, AZ 85260
Phone: 480-525-8496, EXT 743
Cell: 602-565-3646
Fax: 480-436-5226
EM: ParkerGaleTeam@GenCorMortgage.com
LinkedIn: http://www.linkedin.com/in/billparkercpa

MISSION STATEMENT: To create an unbelievably enjoyable experience for my clients, while guiding them through the most important financial transactions of their personal lives. My clients know me as their Mortgage Lender for Life. I truly appreciate your referrals.

If you think it's expensive to hire a professional to do the job, wait until you hire an amateur.
Red Adair, Oil well firefighter
1 vote
Gary Capozzo…, Mortgage Broker Or Lender, SCOTTSDALE, AZ
Fri Nov 1, 2013
Hi Annmarie did you ever speak to a lender? If you did contact Bianca to help locate a property. Programs are changing soon and qualifying might be more difficult. Also rates have came back down a little since September.
Gary Cappy Capozzoli
Senior Loan Officers
Nova Home Loans
NMLS 207725
602-421-4300
Scottsdale, AZ 85260
bk 0902429
0 votes
Bianca Benne…, Agent, Glendale, AZ
Fri Nov 1, 2013
This is a very good question! Did you contact a loan officer? A lender?

Best Regards,

Real Estate Professional / Prestige Realty
Bianca Bennett / 602-570-7898
Bianca@InvestInArizonaHomes.com
Website: http://www.InvestInArizonaHomes.com
0 votes
Jason Webb, Agent, Glendale, AZ
Tue Oct 15, 2013
As has been pointed out, talking to a lender is your best bet. Find a lender that specializes in credit repair as they should have first hand knowledge on what works best.

Using some credit is probably better than using none. I have heard the ideal target number is around 9% balance of available credit. Again seek the advice of a lender.

To hit the target balance without incurring interest, you need to pay down the balance when your credit card company reports to the credit bureaus and pay off the full balance by due date. When the credit card company reports to the credit bureaus may vary by company. I am guessing most report when or about the time they create the statement. Therefore pay down your balance a few days before your regular statement date. Then pay the additional amount due before due date to avoid interest charges.
0 votes
David Rider, , Phoenix, AZ
Tue Oct 15, 2013
There are two parts to this question, paying a card off and then closing an account. For qualify purposes, paying a card to zero should be reflected within 30 days of your billing cycle. If that number is 0 when we pull credit then it won't count against your qualifying ratios.

If you close the account then it will affect your score in a neg fashion. I do not recommend that.

David Rider (200787)
CMG Mortgage Inc
480-788-9221 Direct
2500 S Power Rd Suite 103
Mesa AZ 85209
BK0110707
Web Reference:  http://www.DavidRider.com
0 votes
Jennie Miller…, Agent, Phoenix, AZ
Tue Oct 15, 2013
You should ask your lender that is working to get you prequalified since they will be able to tell you.
0 votes
Jose Dias, Agent, Scottsdale, AZ
Tue Oct 15, 2013
Actually you probably should talk with a loan officer as soon as you decide you want to buy a home. Sometimes it is not in your best interest (from a credit perspective) to pay off the credit card.

Note that I am not advocating that maintaining a balance in your credit card is a good thing. However sometimes paying off your debt may actually hurt your credit.

Good luck!
0 votes
Sean Heideman, Agent, Phoenix, AZ
Tue Oct 15, 2013
Annmarie,

I would not wait. I would speak with a loan officer as soon as possible. We work with some of the best loan officers in the state and I would be happy to provide you with a referral.

Sean Heideman, Broker
Position Realty
Office: 480-213-5251
0 votes
Harnek Dadia…, Agent, Glendale, AZ
Tue Oct 15, 2013
Best way is talk to a lender as soon as you can and they can help you device a plan to get you qualified.

Thanks
Harnek Singh Dadiala
HomeSmart
623 229 6691
http://www.agentsingh.com
Web Reference:  http://www.agentsingh.com
0 votes
Raoul Lousta…, Agent, glendale, AZ
Tue Oct 15, 2013
Hello Ann

i would go right now and talk to a LO
see where you are if you score is not where you need it and the credit cards still show your high balances not updated the Lo should be able to help you.

thanks have a great day
0 votes
annmarie369, Home Buyer, Phoenix, AZ
Tue Oct 15, 2013
Thank you all for your answers. I have spent the last 10 yrs or so using my credit cards as a debit card and paying them off each month. I have done this to help increase my credit score. I know paying the cards off will cause my credit to fluctuate but I am not willing to pay the minimum and incur interest; therefore, I need to stop using them for a while until I go through the home buying process. What I do not know is how long does it take once I pay them off to stabilize my credit so I can go and get prequalified. I'd like to have my ducks lined up before beginning the process.
0 votes
Doug McVinua, Agent, Gilbert, AZ
Tue Oct 15, 2013
Its never to early to get Pre-Qualified, doing so enables the lender to provide any advice necessary to maximize your opportunity to get a good loan.

I have a few that have gone months in advance and then have the time to make adjustments. Some wait, Pre-Qual and buy the same day. You have choices!
0 votes
BParker, CPA*, , Scottsdale, AZ
Tue Oct 15, 2013
I agree with the "it depends" idea. The easiest way is to wait until the bureaus update your scores, which requires the lender with the card to get to the 30-day cycle of reporting your balances.

A point to be made is, do NOT close the card if it is one of your longer-term open accounts. You will lose both points due to shorter credit history AND because now your outstanding debt will be a higher percentage of your over-all available credit amount.

Good luck. If you want a REAL quality lender, call the Parker Gale Team! :) (Just jiving you, Jonathan LOL)

Bill Parker, CPA*
Parker Gale Team
Sr. Loan Officer
NMLS #223607
*Licensed, no longer practicing

15730 N. 83rd Way, Suite 103
Scottsdale, AZ 85260
Phone: 480-525-8496, EXT 743
Cell: 602-565-3646
Fax: 480-436-5226
EM: ParkerGaleTeam@GenCorMortgage.com
LinkedIn: http://www.linkedin.com/in/billparkercpa

MISSION STATEMENT: To create an unbelievably enjoyable experience for my clients, while guiding them through the most important financial transactions of their personal lives. My clients know me as their Mortgage Lender for Life. I truly appreciate your referrals.

If you think it's expensive to hire a professional to do the job, wait until you hire an amateur.
Red Adair, Oil well firefighter
0 votes
Gordon Hagem…, Agent, Scottsdale, AZ
Tue Oct 15, 2013
Your best bet before you do anything is get in contact with a mortgage lender....

Let them guide you as to what you should and should not do....

Give my contact Renee Navarro a call. She works for Chase bank and can help you answer you questions and even get you prequalified.

Renee 480-620-1641 or renee.navarro@chase.com

Let her know I sent you. I can also help you find you next home when you are ready.

Gordon 602-552-6421 or http://www.AZ1HomeSearch.com
0 votes
Gary Capozzo…, Mortgage Broker Or Lender, SCOTTSDALE, AZ
Tue Oct 15, 2013
That would depend. Did you pay the card to raise the amount you qualify for or pay it to raise your score? Either way you could wait for the bureaus to update of get a rapid rescore.
0 votes
Jonathan Dal…, Agent, Glendale, AZ
Tue Oct 15, 2013
It depends. In some cases, the lender may be able to perform a rapid re-score to determine what your score now is. If you need a quality lender, contact Corbin Olsen at Academy Mortgage, 480-580-1400.
0 votes
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