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AMEX announces $300 giveaway- DON’T DO IT IF YOU ARE APPLYING FOR A MORTGAGE!

By Gerry Suarez Jr.

Mortgage and Lending with New American Funding NMLS 6606 310298

February 24, 2009 08:11 AM

stop light

A number of media sources today announced that American Express will be offering some account holders a $300 incentive to pay their balance in full and close their account. This is obviously an attempt at reducing their exposure to future losses they feel may come from these accounts defaulting at some point.

If you are applying for a mortgage or intend to do so anytime soon DO NOT TAKE ADVANTAGE OF THIS OFFER! By reducing your overall available credit you can negatively impact your credit score, causing you much grief come mortgage time. Contact your trusted loan officer before acting and have them recommend which course of action is best for you.

This applies whether you are planning to purchase or refinance.

Gerry Suarez, Jr.

Your FHA Loan Pro!

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Jeff Belonger

Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ

The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Gerry... many people don't realize that paying a credit card off and or closing it could hurt their credit scores. But it all depends on how much crdit that they have and their situation. It wouldn't affect all, but it could affect some.

Feb 24, 2009 08:43 AM

Gerry Suarez Jr.

New American Funding NMLS 6606 - Orlando, FL

FL Mortgage Guru

Agreed Jeff, but when I saw this the first thing I thought of was that some poor soul was going to call to get on this program, only to find out his score dropped by 40 points because he had only this and one other card that he maxed out by transferring the balance to it! Better safe than sorry!

Thanks for the comment!

Feb 24, 2009 08:59 AM

Jason Sardi

Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC

Your Agent for Life

Parsimonious & spot on. Good info for everyone who has accounts with AMEX.

Feb 24, 2009 09:33 AM

Parsimonious- good word Sardi! If only our government could learn it! Hey at least Emperor O was talking parsimoniously last night. Now let's see Congress walk the walk...

Feb 25, 2009 12:17 AM

Coldwell Banker Camelot Realty

Coldwell Banker Camelot Realty - Mount Dora, FL

Homes for Sale Mount Dora Realtor

Gerry,

This is a great example of how not to close on your home!

BTW,

Is it true that paying off a credit card and keeping it active could lower your score?

Ray Levy

Feb 25, 2009 06:08 AM

Ray-More often it's the other way around. By closing a credit card you are usually reducing the amount of available credit. If someone keeps balances on any credit cards those balances would then become a higher percentage of the available credit that's left.

For example, say a borrower has 2 credit cards and both have a limit of $15k. The cards carry a balance of $10k and $4k respectively. That represents $14k used of $30k, or less than half the total available credit. Now say this borrower paid off and closed the smaller balance card. That now leaves us with a balance of $10k on $15k, which now represents 2/3rd's of the total available credit being used. That person's score just took a hit because it looks like he is borrowing too much as compared to his limits.

Now take the example above and picture what would happen if the borrower transfered the $4k to make a combined balance of $14k on a card with a $15k limit. That scenario can cost someone 50-80 points on their credit easily.

Hope this helps some, and thanks again for the comment!

Feb 25, 2009 06:57 AM

Maya Thomas, Broker

Tampa, FL

Please see my client recommendations.

I haven't seen this offer. I have to stay on top of this for some of my buyers. Thanks.

Mar 04, 2009 04:03 PM

Maya-The offer received a short burst of press when AMEX made it public. Haven't heard much about it since but I'd be curious to know how many people are taking advantage of it.

Hope the info was useful and thanks for commenting.

Mar 05, 2009 08:31 AM

AMEX announces $300 giveaway- DON’T DO IT IF YOU ARE APPLYING FOR A MORTGAGE!

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