Asked by Otis, 07631 • Fri May 3, 2013
I currently have about $17000 owed in an auto loan and $20000 saved up as a down payment in addition to a $10000 emergency fund. My question is should I just use part of my savings to pay off my car which has a 4% interest rate and start over from scratch to build my down payment fund or save for a down payment until I'm at 20% which would be approximately $50,000 in my area which would help me avoid PMI? It would take me almost a year to build up that much money again and I'm afraid that in that time interest rates of home loans will go back up or home prices will go up. Will having the car loan affect my ability to get a home loan (ie interest rate/loan amount approved)? If it makes a difference I have an excellent credit score and have been employed in the same institution for at least 5 years.
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