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Reply to "Pay off mortgage vs pay for renovation "
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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Always pay down debt, OP! If you pay off your current mortgage this will drastically increase your credit score and credit utilization ratio. Once that happens, you’ll be eligible for much lower interest rates. Then you can borrow money at even lower rates. Don’t be fooled by all the jealous naysayers trying to keep you tied up in golden handcuffs. [/quote] Wait what If you pay off your mortgage, your credit score will drop by around 30 points if it's the only installment loan you have. It's very beneficial to your credit score to have an active installment loan (not a credit card with a balance) with a long positive payment history. https://www.washingtonpost.com/business/2023/09/08/850-credit-score-drop-paid-off-house-mortgage/ Also, you think OP is going to get a new loan for less than 2.8%? Finally, credit utilization calculation only involves active credit cards, not any installment loans. Literally everything written in PP is incorrect.[/quote] No. No. No. Quoting anything from the Washington Post is the first indication that your advice is biased and wrong. And, yes, I just was approved for a Discover Home Equity Loan a month ago for $300K at 2.66%. They will cut the rate significantly (1/3 normal rate minimum of 7.99%) if you’re taking out the maximum for 30 years and have recently paid off your primary mortgage. And credit utilization definitely includes installment loans. It’s why your credit score is so much lower just after you open a new loan but haven’t paid down much of the balance. Do your homework![/quote] This poster is an idiot and possibly a liar. But hard to know if lying or just doesn’t understand the heloc they signed.[/quote]
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