Refi or not?

[lonerower]

Approved for Capital One auto that would reduce my payment by $47.  Going from $427 to $380  I have 2 years of payment on my current loan.  My question is lower payment worth starting a new loan?  Would the high starting balance on a new loan bring my score down?  I might be house shopping in a few months so I am wondering if hold off on this reduced payment till after home loan is complete?  I am weighing the risk and benefit of lower payment and reduced DTI ratio.

[Remember0]

It's possible your score would drop a little due to AAoA, the high starting balance, and the closing out of an existing auto loan.

What do your FICO scores look like at the moment? And what's the interest rate of the old loana nd new approval? Finally, what's your DTI look like? $40 isn't THAT huge a difference typically...and in general you want to refrain from applying for credit before mortgage closing, so I wouldn't apply for anything till your mortgage is closed (if you want the mortgage within the next six months).

[lonerower]

FICO equifax is 688.  Not sure if Capital One uses auto enhanced but when I applied to BMW last month with one of my credit cards near maxed out my auto enhanced was still 690.  I have since paid down all my credit cards to zero. That was different vehicle than the current one I am looking to refi.  The Current loan is USAA at 8.5%.  Capital One offered 5.8%.  I guess that is probably not worth the refi.  I am suprised I did not get in the mid 3% area with Capital One.  I am into my 4th auto loan with no bad payment history.  I would imagine my auto enhanced score would now be north of 700.  My monthly DTI ratio is between 10 to 20 percent depanding on what I include.

[pizzadude]

Take a look at how much interest you have left remaining on your current loan and compare it against the amount of interest which you'll pay at the new rate ~ that's what you'd potentially gain by refinancing, in addtion to the reduced monthly payment.

[Creditaddict]

Are you talking about lowering your payment 50 but extending your loan out 3-4 years instead of 2 you have? I would NOT DO THAT.

If you are going to stick to 2 year loan and save $47, YES!

[lonerower]

My situation seems to be improving every month.  My credit score just increased to 707 EQ.  I am now thinking Capital One's offer of 5.8% is now not a good offer given my score.  I was at 688 last month.  This was a refi for a loan for the same term not a longer term.  I would agree not to lengthen the term of the loan.  I have seen claims of approximately 3.5% with a lower score than mine.  My thought with all this was to lower my monthly payment for DTI ratio improvement when applying for a home loan.  However seems the common advice is to not do anything prior to applying for a loan.  I see what the opinions are on the mortage page. 

[Creditaddict]

DCU with 707 EQ!