The objective is to get my score up quickly for a mortgage application. In a nutshell, I'm part owner (with brothers) of a house and have a morgage that has about $96,000 left on it. I am not the only borrower listed. I am trying to take over ownership of the house myself, renovate it, and move in. The morgage lender is using the following strategy: 1. Take out an additional home equity loan and change the house title to my name only (the 2 brothers won't mind). Use the new loan (about $150K) to renovate the house. 2. Based on the increased value of the house as appraised, take out an additional morgage for the full (or close to) value of the house. Use this money to pay off the 2 brothers. The lender said that the short term loan for the renovation will not be cheap, but it will be for only the length of time it takes to renovate. He says that in the 6 months that I've been paying the new morgage in my name, my credit will go up significantly. This will allow me to get a much cheaper 30 year loan for the full value of the renovated house. I still have lots of questions, but I thought I read here that morgages do not improve your credit score much. Is that true? thanks, bushka
Exactly. The problem now is convincing my brother(s) that no harm can come to their credit from doing this! I have been looking for a good, simple website that I can point them to for some confidence, but haven't found the right one yet. bushka
The basic item to give your brothers confidence is to have the physical credit card sent to their address, and they hold or destroy it. You will not know the actual account number. The other tactic used in these AU scenarios is for your brothers to put you on as an AU, and once the account hits your credit reports (30-60 days), they remove you as an AU. Take a look at apex credit services, the website is posted on this board, for further info. Your brothers can also got to www.about.com/credit they list a lot of information on AU for family scenarios like this.
Thanks. They are not concerned that I would use the card. I don't even want it. They are more worried about something happening to their credit simply by having an AU on a credit card. Basically, they are as unaware of credit report issues as I was before getting into trouble with it myself, and coming here. I think the idea of doing the AU just long enough for it to report is GREAT. I didn't occur to me that the TL would stay on there! I think the short duration of the AU agreement is the best selling point to my brother(s). regards, bushka
