So my wife and I just refinanced on our house. It was pretty sudden since we had only bought our house a little over a year ago. I was at lunch with some coworkers, and one of them mentioned she had just bought a new house and got a “great rate” with a friend at church, who works at a bank. Let me stop right here and say that every time I hear someone got a “great rate,” I immediately give them “The Rock eyebrow” (yes, the wrestler). The reason for that is because I think my mortgage broker has always given me the best rates and usually without closing costs. I think it’s because she’s Asian and works at an Asian owned mortgage broker who basically shops rates around and she just takes a lower margin. For example, if your bank/broker says the current rate is 4.25% for a 30 year fixed, that’s the rate you’ll be paying. However, they are probably selling that rate to another bank for 4%. That means, the broker profits the spread between the 4.25% and what they sell it for (which you don’t know). If this spread is large, then that’s when they can share the wealth with you and give you a credit for the closing costs which is how you get to “no closing costs.” I think my broker and the company she works for makes money based on the VOLUME of loans they are closing since they are “cheap” versus all of those other fat brokers out there.
Anyway, back to my story, so my coworker told her that her friend could get her 3.8% on a 30 year fixed without closing costs. I then remembered in my head that our original loan was around 4.8% or so. At a 1% difference and only 1 year into our mortgage, I figured we’d be saving a lot of money over the long run. The rule of thumb says you should only refinance if the difference is around 1% to make it worth your while. I crunched the numbers on bankrate.com and it said I’d save about $290 per month. I then emailed my broker and asked her what the current rates are for a refinance. She told me it was 3.75% for a 30 year fixed and no closing costs. SCORE! I then asked her how much I’d save per month and it turns out it’d be around $200 per month. That’s when I told her I wanted to do it.
Credit Report
I won’t go into the long story, but the house is under my wife’s name. That meant they’d have to run HER credit for the refinance. Since I didn’t think we’d ever refi, I had been applying for new credit cards for her. After her report was pulled, my broker wanted a document as to why there were 2 recent pulls from AMEX and USBank from 2 months ago. I told her it was for 2 credit cards (the AMEX BIZ PLAT and Club Carlson Business card). We had to have a signed statement stating that they were for credit cards. Luckily, I didn’t apply for any more cards than that. They didn’t ask about the cards that I had applied for in May of last year.
Authorized Users
Here’s where things got sticky. My broker then told me that on my wife’s credit report, she was an AU on 9 cards and that she needed the latest statement from each card. She then gave me what I thought was the last 4 digits of the cards, but it turns out it was the 4 digits BEFORE the last 4 digits. Here was the list:
Citi – I had added my wife as an AU on my TY Preferred card since it currently gets 3X at dining. Citi AU cards have the same card number, it was easy for me to get that statement online.
BoA – This was my Alaska card that I added my wife to. I had actually closed the card a month before, but the credit report still caught it. Like Citi, they use the exact same card number, and I was able to get that.
AMEX – I have 3 personal cards and 2 business cards from AMEX that I had added my wife to as an AU. Only the 3 personal ones showed up on her credit report. The strange thing was that I could not find any of the 4 numbers on any cards. I figured the credit report must have scrambled the 4 digits for security purposes. I sent my broker my 3 personal AMEX statements, and she told me she was able to match them up (but I’m not sure how – probably by dates or balances?) In the past, AMEX used to report the 1st card’s date as the date you opened a new card. For instance, if you opened your 1st AMEX in 2000, and you signed up for an AMEX in 2015, on the credit report, the new AMEX would say you were a member since 2000, thus improving your average credit history, thus your score. However, it looks like recently, they are now putting 2015 as the start date, at least for authorized users.
Barclays – I could not find this card because the 4 numbers that the credit report gave didn’t match any of my or her Barclays cards. Plus, unlike the other 3 banks, Barclays doesn’t require you to know the person’s SSN to add them as an AU. I was befuddled as to why this showed up on her credit report. I wonder if they matched the name with the address or perhaps because she has her own Barclays card that they were able to match up with. I sent them my statement anyway. Luckily, I had stopped spending on this card since I downgraded it last month. Not sure what they would say if they saw $30K in monthly charges on a $10K credit line. Wouldn’t have been good.
Chase – Luckily I didn’t add her as an AU on any of my personal Chase cards since there aren’t any Chase cards worth spending on, so no data points. She is an AU on my Ink Plus business card, but that did not show up on her credit report.
Conclusion
If I were to do it again, I wouldnot have applied for any new credit cards for at least 6 months before applying for a big loan (either as an AU or yourself). I also would not do any heavy manuf spending on any cards that she was an AU. I would also try to close out or remove her as an AU on cards that she no longer uses (like I did with the BoA Alaska card.) I still don’t like how Barclays was on her credit report when I didn’t need a SSN to add her as an AU.