How many of you have used a large sum on credit cards for buying or rehabbing? I’m just curious. I have some 0% credit cards for 15months and a fixed rate of 7.99 after(I’ve been getting them in the mail like crazy the past 6 months). And I may be doing something risky and little crazy but in the past 3 months I have put 6k on one and will probably need another 5k to finish my project. I have a loan for 20k that I used to purchase the property also and my main question is, if the banks are offering me 8-9% on a secondary loan, shouldn’t I just leave my balance on the credit cards until they are paid for? The APR is slightly less but would also save in refinancing fees. Oh, and I plan on keeping the property for a while for rent and making the next project a fix-and-sell for some profit to help pay the credit cards off. Well, at least that is the plan.
Lee-Land,
I have done some things that are similar to what you are discussing, including transferring balances from one card to another to get the 0% interest. Be aware that this practice will negatively impact your credit scores. Lenders tend to look unfavorably on high credit card debt, but consider mortgage debt just part of the business. If you have good credit, this may not be a problem for you, but if you have marginal credit (probably not or you would not be getting the offers), it could lower your score enough that you would not be able to get favorable loans. Given the choice of credit card debt or mortgage debt, I would recommend the mortgage debt until the spread between them is in the 2 to 3 percent range unless the loan is going to be strickly short term. If you need to put your remodel on the cards until you can get the house sold, then by all means do so, but pay it off when it is done. Be smart about your credit cards. Keep the balances below 50% of credit limits. pay more than the minimum payment and pay then off when you get paid.
Wilson
thanks for the info. i didn’t think about it lowering my credit score.