Big Brood

Over at The Sun’s Financial Diary, Sun has a post about the anniversary promotion from myFICO that allows you to get your FICO score at a 25% discount. Look toward the end of the post. This is a really great deal.

Also, if you’re wondering what determines your FICO score and what it is all about, I found this great guide on myFICO.

In summary:

• Credit scores are used to determine your ability to pay for your loan.
• The FICO score is based on:
  • 35% payment history
  • 10% Types of Credit in Use
  • 10% New Credit
  • 15% Length of Credit History
  • 30% Amounts Owed
• This guide gives great tips on how to keep your score in good shape such as:
  • Keep balances low on credit cards
  • Pay off debt rather than moving it around (whoops, we have done this one too often!)
  • Do rate shopping within a short period of time. This helps the FICO system to determine whether you are really shopping for rates or desperately casting about for new lines of credit.

We have not checked our FICO yet as we didn’t want to spend the money and we didn’t really think we’d be in the market for new loans. Our mortgage shopping has gone without a hitch so far so I’m not too worried (not to mention that Goosey has always been very good at paying bills on time.) However we did use a FICO estimator just to get an idea of where we stand.

Yahoo Finance has nice article entitled
A Fed Rate Cut Could Send Your Mortgage Rate Even Higher

that seems to correlate with my earlier analysis that now is a good time to get a refinance on our loan. Interest rates may get better in the future but inflationary fears will likely drive the long-term interest rates higher.

Since we’ll be looking for a 30-year mortgage, that’s what we’re interested in.

As a side note, this may seems like a repeat of our mistakes with our car as we refinanced that as well. In fact, the over all goal is the same. Reduce monthly payments and reduce overall interest payed. I think that this is still the right choice though because we are in a in a long-term effort to pay off all debt except for our house loan and I don’t currently plan to pre-pay my mortgage. Also, a house is a much longer-term than a car. We’ll essentially be extending our “overall mortgage time” to 31.5 years, but we’ll be paying less interest overall.

JD over at Get Rich Slowly has a great article on whether to pre-pay or not. His conclusion: Do whatever works best for you, but it seems it may be wisest to invest in an index fund. I think this is the way we’ll go once we get our stupid debt payed off.

Are you pre-paying or investing? Do you have any advice on what has worked better for you? I’d love to hear your Honk on this. Am I putting my foot into something I don’t want to step in?

We’ve been thinking about refinancing our home to take advantage of lower interest rates. We missed the bottom which seemed hit at around 5.48% national average for a 30-year fixed-interest mortgage near the end of January. Today’s rate of 6.04% would still be OK for us as we’re currently at 6.8% (on one loan, we have another loan which was a dumb mistake that I’ll explain later.) The question, is: Is this the right time? The answer for us appears to be a definite “probably” (how’s that for hedging!)

With fed discount rate cuts, our first thought was to refi now! But, if you’ve been watching the trends you see that mortgage rates actually went up after the last Fed rate cut. So, I dug in a little deeper and found more information.

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