Should I refinance now or wait?

[Nate D.]

Hi BP Friends!

I've got a question regarding the timing of a refinance and purchase and how my credit scores will affect my ability to obtain financing:

Background:

1. My wife will be a co-applicant in both cases

2.  I want to refinance an existing mortgage to substantially lower my payment via the HARP program.

3. I want to purchase a new home in the summer of 2016.

4. The average of my credit scores is ~825

5. The averages for my wife ~ 785

6. Broker for my future purchase needs 760 middle score for the best rates on the new purchase. The way I understand it, they will usually take the lowest middle score (likely my wife's).

Questions: What would you do in this scenario? Should I refinance now and still be good 6 months from now to purchase our new home? Or, should I wait to refinance after the purchase?

[Russ Draper]

I presume you mean summer 2017.

First, I would find out how much the refinance is going to save vs the closing costs.  Make sure it is worth doing if you are sure you will sell in ~6mo (it probably isn't worth it).

Presuming the numbers work, I would refinance now, just in case something comes up and you can't buy this summer.  I would also focus on raising your wife's score as much as possible.  Credit Karma is free and gives good advice on how to raise your score.  You may find something as simple as raising your credit card limit improves her score!