Two Steps are Better than None

In the five years that Dan and Gina have been at their current home, they have welcomed three children to their family and renovated various portions of the house using credit cards. Now, they’re looking to use home equity to consolidate the debt they had taken on and get a little cash out to finish their home projects.

Dan is self-employed, has been in business for over ten years, and shows good income. Gina has a few jobs in the same industry and has a stable income as well. The property value has increased considerably over the past five-plus years they’ve owned their home, so they have more than enough equity to accomplish what they’re looking for. The only negative we are dealing with is that due to the higher credit card balances, Dan’s credit score is just over 620.

The good news: they can still accomplish all of their goals with that score — but the interest rate will be higher than if the score were 700+. So I suggested to Dan and Gina that we approach this as step one of the process to reposition them. Step one is the refinance to consolidate the debt, which will free up their available credit on revolving credit cards, and then raise their credit scores. Once step one is completed we can revisit mortgage rates to see if we can reduce them to save them more money!

As much as you might hope to accomplish all your goals in one shot, sometimes you need to accomplish as much as possible but position yourself to attain the rest down the road. If you aren’t doing so already, you should be working with someone who is providing you with solutions!