Tulsa Mortgage : Podcast 31 – Part 1
Steve Currington: This is Steve Currington on the Steve ‘n Tyler Show episode number 31.
Speaker 2: Welcome to the Steve ‘n Tyler Show with www.stevecurrington.com and Tyler Wagner.
Steve: Who negotiated the contract for you Tulsa Mortgage?
Speaker 3: A realtor.
Steve: That was pretty smart. Good for you man.
Speaker 2: They are talking about everything you need know about mortgages, home loans and more. Nobody knows mortgages like these two. Get ready because here’s Steve and Tyler.
Steve: What is up, my Tyler?
Tulsa Mortgage Tyler Wagner: Just hanging out, ready to talk about Tulsa Mortgages.
Steve: That’s right. It’s Tulsa Mortgage time and we are live on the podcast, however, not live on Facebook. I think I’m going to reserve that for another episode. Snap. Hi, today we are talking about– I’m in the process of a loan and what I’m I going to do with my credit? And whether or not I should get financing on new stuff, you know what I’m saying?
Tyler: Is it credit or credits.
Steve: Credits, yes. It’s credits. So, it’s crickets. Wow, the crickets are a hot sauce, man.
Tyler: That was loud.
Steve: That was crazy. So anyway, we are talking about, don’t get new financing on anything while you are in the process of buying a loan. Because, number one, the new payment is going to affect your debt to income ratio, meaning, let’s say www.stevecurrington.com has you approved or prequalified Tulsa Mortgage for a $215,000 loan and you go get a new car paint and now you only qualify for $110,000 loan, right? Has that happened before, Tyler?
Tyler: Several times.
Steve: Then new credit lines can also, number two, can also lower your credit score. Steve Currington has you approved and you got a 640 credit score and your score drops by 30 points and now you are toast.
Tulsa Mortgage Tyler: Bad boom, though.
Steve: Bad boom. That’s like a holy cow boom. Let’s holy cow boom. Dude, those are hot. Those are hot right there. We need to get martial on that, meaning that there are loud folks listeners out there who through– our little sounds are loud. So anyway, new payments will affect your DTI, number one, and new credit lines, new accounts can lower your credit score and that’s actually common that even if you have great credit when you open up a new account there’s usually can be like a dip in your credit score.
So, I mean, the lesson is you just don’t want to mess with your credit while you are in the process of buying a house, doing a loan. It just, don’t– I mean, I advise my customers just not to touch their credit. I get calls like, “Hey, I need to turn on the utilities and I think that they are going to pull my credit, is that okay?” And I love that because it tells me that they are following the rules-
Tulsa Mortgage Steve: -so that there is no surprises, because that’s really what we are trying to avoid, right?
So– here is an example, if you refinance your car loan to lower your payment during the loan process even though your payment may lower and help you overcome DTI limitations, your credit score could fall below program guidelines. So, somebody might say, “Well, I got a new car and the payment is lower so that should help me.” Or, “I refinanced my car and the payment is lower, so that should help me.” Well, that’s not necessarily the case. So, Tyler, I’ve got a car I’ve made on-time payments for for 13, 14, 24 months, 36 months or whatever, and then I’m at a refine, you know what that’s going to do to my credit score.
Tyler: Right. Well- and people might think that it’s from the initial credit pool, whenever they do it lowers your score. But no, it’s the part that you are trying to do to lower your score. It’s the getting the new account on your credit that will lower your score.
Steve: So here is how it rolls. It’s like, “Hey, they have a new account. I wonder if they are going to pay on time.” So, you get, like, a dip, your other account disappears, basically, because it is zero balance and it didn’t factor in and then they are going to wait until– the credit bureaus, until you’ve got 90 to 120 days of payment. So, three to four months of payments and then you’ll start getting credit for that account again.
So, be careful about- if you are advised by your lender to do that then that’s one thing, but be really careful about doing that with your credit while you are in the process. Anything that you do in the normal life, just be careful about doing it when you are buying a house because if you want to refinance your car, for some odd reason in the middle of July, and you are not buying a house, I don’t care. And it probably isn’t going to make a difference. It’s just when you are in the process of buying a house.
Tulsa Mortgage So do that. So, again, we are talking about new payments affecting your DTI and your new credit loan and how it will lower your credit score. We really just had our statistics because it happens, I mean, it just does, unfortunately, happens a lot. There is people that literally– we put countless people- have financed furniture, electronics for the new home during the loan process. Many of them have gone from loan approval to loan denial because of doing this, right Tyler?
Tyler: Yes, several times.
Steve: And so I hate to laugh about it but I mean we have to laugh about it, otherwise, we’ll punch ourselves right in the face because we are literally dropping-
Tyler: [chuckles] Just crazy.
Steve: -but what you want to do is not do that. That would be like a really good idea.
Steve: Like, on a scale of one to really good idea, that would be a really bad idea to do and a really good idea to avoid.
Tyler: So it’s like a negative seven.
Steve: Yes. Don’t go buy furniture for your-
Tyler: What about, “Hi, man, I’m going to remodel this house. I’m buying it today. I bought all the new dry wall and the paint.”
Steve: [chuckles] Yes. Well, we are fixing it up.
Tyler: I put it on my new home depot card yesterday.
Steve: And he has to talk like a [unintelligible 00:06:25] which, by the way, Tyler talks like that normally. He changes his voice for the podcast but around the office it’s like that. “Hi, Steve. Hi, man, we’re going to pull this guy’s credits?” Does that sound about right?
Tyler: [chuckles] It’s only funny because it’s true.
Steve: Right. It’s only funny because it’s true. So, Tyler talks just like that in his normal conversation for sure. So, yes, that’s exactly right, I mean, here’s the thing. I don’t care what you do with the house when you move in the house, about the house. If you’ve got disposable money and you want to fix it up or do whatever, hey, go right ahead and do it. That is awesome. I’ll applaud you for doing that. However, don’t do it while you are in the loan process before you’ve bought the house. Some people buy a house they are already living in, right Tyler?
Tulsa Mortgage Steve: They are already living in it. So we had a guy that- he’s already living in a house and he’s buying it but now that he knows he’s buying it he goes and literally starts fixing it up, like, doing everything to it. Well the problem is, we ordered the appraisal and the appraiser shows up and the house is torn to pieces. There is no flooring in the house. I mean, he’s half way through redoing the roof, for some reason on his own with his next door neighbor buddy. He’s got, like, dry wall missing, flooring missing. I mean, this house- so guess what we get? Appraisal subject to the following repairs and there is like 30 of them. And he’s like, “I don’t get the money to do that.” Well, why did you start tearing the house apart? Like, who told you to do that?