Refinance Effect On Credit Score

[mjb43138]

My wife and I are planning to purchase a new manufactured home this spring. We will have to sell our old house. The interest rate on our old house is over 6%, and my credit score is currently 776 Experian.
We are concerned that with the market such as it is, we may have difficulty selling our old home. This would mean making 2 house payments each month until it is sold. I can easily refinance with my credit score, and am thinking I should to get a lower payment in case it takes some time to sell. My question is, would refinancing our old home right now have any effect on my credit score? I don't want to jeopardize my ability to purchase a new home in approx. 4 months. Or should we wait until a loan for the new home has been approved?

[David Oxhandler]

Credit score is only one part of the decision lenders make. Your score is very high. I doubt that will be a problem. BUT If you make application to several lenders. numerous inquiries will lower your score.

Score is only one part of any lenders decision.

They must consider the ratio of total income to housing expense. Even if you have a high score they will want to know that there will be enough money to make both house payments, cover your other monthly obligations and still have enough "disposable income" to live on. Most loan programs will permit you to obligate around 28-32% of your yearly income to your primary residence.

If you refinance you will lower your total monthly payments. That will help with your ratio of income to housing expense.

Keep it easy - Find a mortgage broke that you are comfortable with. Bring him/her a copy of your credit report so they don't have to pull your credit before suggesting a plan of action. Let them know exactly what you would like to do and ask how they can arrange both your refi and new mortgage to your best advantage.

[Celtlund]

I went through a similar situation a couple of years ago when we were purchasing our manufactured home. We also had excellent credit ratings from all three credit companies and were able to come up with 20% down so we could avoid PMI. Even with our other home not sold we were approved for a conventional loan.
I would not recommend refinancing your current home, not because it will hurt your credit score but because you will end up loosing a lot of money. You are going to have to pay for an appraisal, closing costs, etc on the current home and that is money you will not recover when you sell. It will be a straight loss to you.
As long as you can comfortably afford two mortgage payments for several months, that is probably what you should do. You might want to talk to a mortgage broker and see if you can get pre-qualified for the MF home. Be up front with the broker and let him/her know what want to do. For us it was no problem getting the financing even with the mortgage on our house.
We ordered our MF home in October and put our house on the market. Thanksgiving to the New Year is not the best time to sell a house but we had a great agent and finally closed in March. I retired then and we moved into our MF home which was already set up in another state.
I wish you the best of luck and if you have any other questions don't hesitate to ask. P.S. Don't forget when doing your financial calculations to see if you can afford to carry both houses, you will also have to pay the minimum utility bills for the house you are not living in.

[David Oxhandler]

Excellent advice Celtlund. No one knows better than a man that has been through the experience.

The only advantage to a refi would be if you absolutely have to lower your monthly payments to qualify for the new purchase.