Home Buying in 55106>Question Details

stonescircle…, Home Buyer in Fort Bragg, NC

should I refinance my car before purchasing a home? How will it effect the purchase of a new home?

Asked by stonescircle612, Fort Bragg, NC Thu Jun 13, 2013

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Christopher Block’s answer
I have always initially started out by telling buyers "do no harm" until they speak with a loan officer. In general, don't take on credit/debt or do anything while buying a home like refinance.

Most of the time there won't be a problem, but YES I have had buyer's financing fall apart over this topic. It is something you want to take serious.

Maybe you are going VA and coming from NC? What I may suggest is getting in contact with a local lender here in Minnesota that can help you with this question, and any others you have down the road. I would be more than happy to give you a referral? Just contact me.

Chris Block
Realtor 651-307-7663
chris.block@imetroproperty.com
0 votes Thank Flag Link Fri Jun 14, 2013
Like most questions about mortgage financing, the simplicity of the answer is inversely proportional to the simplicity of the answer. You’ve asked a simple question so the answer won’t be simple. The main factors I would consider as a lender are what refinancing the loan will do to your payment and term, and what will it do to your credit score? These things may have a significant impact on the mortgage you qualify for, or none at all. For example, refinancing the car loan may lower your credit score a few points, which doesn’t matter if your score is high, but if your score is lower to begin with then losing even a couple points may be the difference between getting a loan or not. If the current vehicle payment is high because the term is short, the payment may not count as debt if there are less than 10 months remaining, but if you refinance and spread that debt over the next 24 months we have to count the debt against you, even though it’s lower. The answer also depends on the type of mortgage you’ll be applying for because the rules about how we count your debt and how much debt you can have vary between FHA, VA, Conventional, USDA, Jumbo, Bond, and on, and on.

Bottom line is you need to make the question more complex. Something like “my income is X, my debt is Y, my credit score is Z, I want to get this type of mortgage on this date and wonder if I should refinance my car today?” and then the answer gets easier.

Give me a call and we can talk about what you want to do in a little more detail. Or, call a couple lenders, and see which one asks the most relevant questions before giving you an answer.
0 votes Thank Flag Link Fri Jun 14, 2013
It is my experience that this question has many variables. Your income, your debt to income ratio, your credit scores, your savings and cash on hand or other reserves, the size of the car loan, your reason for refinancing right now - all play a part Your real estate agent and your lender know what will affect you personally. Let them guide you. Liz 612-986=4105
0 votes Thank Flag Link Thu Jun 13, 2013
Hi, stonescircle!
If you're talking about refinancing and not buying a new car, it might not be a bad idea.

And, more importantly, this might be the best time for you to start discussions with a lender before you do anything. While we have great acquaintance with the workings of the mortgage process, it would be best for you to talk to a lender to determine how that will impact your financial picture, whether it will help or harm.

Mind you, it doesn't mean you have to make a commitment to this person, BUT, you may discover that you have a rapport with this person. That makes your home buying process SOOO much easier, to know you have a lender you can call with questions, problems, ideas. The same goes for your agent, too!!!

Good luck~
0 votes Thank Flag Link Thu Jun 13, 2013
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