Mortgage broker says I should refinance before selling/buying home to correct credit rating, yes/no?

Debt/income ratio too high so wants to do a debt consolidation loand prior to marketing my house and me buying another one but is that something to seriously consider? I was going to pay off my debts once the house was sold any way...Mortgage broker says I should refinance before selling/buying home to correct credit rating, yes/no?
Depending on the type of loan you need for your new home, you need to have a DTI (debt-to-income ratio) between 45-50% opn average for a purchase. It makes sense to refi your home to ensure you are prequalified to purchase the new home. It is difficult for a mortgage broker to provide you with a preapproval letter (usually required by a Realtor to prove to a seller that you are a ready-willing-able buyer) unless you meet this DTI guideline. However, ask what your DTI is and ask that to see it on the application. Worst-case-scenario (although unlikely) and if the mortgage broker is unscrupulous and your DTI is fine, they could be trying to get two deals out of one. It is very common to recommend a refi prior to listing your home for other reasons as well - for example if you find your dream-home and you put in an offer, but your current home hasn't sold, your purchase offer will have to have a 'contingent upon current sale' clause. This could become a heart-breaking 'deal-breaker' if your home doesn't sell before the offer expires. A seller cannot be expected to hold the sale for you, while you are waiting to sell your home. Also, it is good to have the cash from your refi in the bank (or better yet, invested) as 'reserves'. This makes a lender feel more confident in lending you money for a hew home, because the extra cash removes risk by showing you could cover your new mortgage payment if for some reason you were to become unemployed. I hope these three reasons help you become more confident with your broker. I know it is scary for everyone, and the media only makes it more confusing for consumers. I commend your questions! Keep asking, information is free!Mortgage broker says I should refinance before selling/buying home to correct credit rating, yes/no?
It might be better to ask banks for a preapproval for a mortgage loan. Understand that a mortgage broker is not a bank. If bank tells you to refinace for the same reason, OK.


You have to be carefull in financial matters. Maybe you should begin paying down your debts and wait for a house purchase until you have done so without further borrowing.In the alternative, sell your home, pay off your debts, rent and look for a home to buy.
no
careful, careful! REMEMBER you might get a good rate, but if you don't have too high of a score it will not be that great. Then you have the cost of refinanceing. The brokers fee can run into the thousands. It ran from 5-10 thousand on $130, 000 that had $3000 equity and unpaid $80,000 to go just 3 yrs ago with average credit.
no, what does your credit rating have to do with selling your house? Once your house has sold, and the mortgage satisfied your credit rating should go up. On the other hand if you are wanting to purchase another home before you sell this might give you the means to do so. There will be fees to refinance, keep this in mind and find out what they will be.
A debt consolidation will lower your monthly debt service. This will in turn lower your TDS ratio (Total Debt Service)to 40% or less which is preferable. This is the number lenders look at. Your TDS should include loans, untilites and credit cards. Just be careful of who you get the debt consolidation from. Some of these lenders charge a very high rate and in the long run, you could end up paying more.