Posted on: 07th Jul, 2011 01:20 am
I have a mortgage on my house which I can afford to pay. However, I applied for a new job and unexpectedly got selected for it. However, my new job requires relocation. Once I relocate, I will have to buy a new home there. I was planning to pay off my existing mortgage asap. Will paying off the loan quickly hurt my credit score and also my ability to get a new loan?
Hi Carey,
Paying off the mortgage quickly will not affect your credit scores. However, if your mortgage documents have a pre-payment penalty clause mentioned, then you may have to pay a penalty if you pre-pay your mortgage.
Take care.
Paying off the mortgage quickly will not affect your credit scores. However, if your mortgage documents have a pre-payment penalty clause mentioned, then you may have to pay a penalty if you pre-pay your mortgage.
Take care.
If you have equity, have you thought about renting it out and have another party pay most if not all your mortgage payment? Or are you counting on the proceeds from your current home to purchase the new home? Having a 0 balance on credit is not as good as having credit that is used often. But paying off your debt will not drastically effect your scores. Credit is based on length of time on accounts, number of account, balance to credit limit ratio (keep under 40%) derogatory, public records and collections, and inquiries to name a few.
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Paying the mortgage has no negative effect on credit at all, and it will be positive, assuming that you've been current on it throughout its lifetime. I would anticipate that paying it in full is more beneficial than trying to obtain a tenant and renting it out, though that could be a reasonable option should you choose to go that route.
