@Anonymous wrote:
@Revelate wrote:For mortgage scores neither EQ nor TU factor installment utilization, at all. Mix of credit and that's it, installment tradeline on the report open or closed you're good to go. EX factors it but unless you're on the cusp of another tier it's generally a bad idea to try to optimize for EX v2 alone.
OP: calculate your DTI, use 43% of your gross income for expected mortgage + taxes + insurance + car note + any other loans you have open, and if you have room then I wouldn't touch the car note at all. If you don't, well, personally I'd be looking to sell the car and getting something cheaper unless you're making enough money so that it's irrelevant.
What APR is the car loan at as well? All other things being equal when it comes to getting mortgaged: mo cash, mo bettah. Also what do your current scores look like?
My DTI is 43% now with everything and my credit scores are below. My APR is 3.04%. I do not run credit card debt at all. So how about I save $1,000.00 per month and put $1,000.00 on the car note? Thank you Revelate
Scores are:
EQUIFAX 804
TRANSUNION 815
EXPERIAN 811
Save the $2000, even if those aren't your mortgage scores (and if they are, those are phenomenally good, and really good even for FICO 8 haha) you should be fine as you can't get there with an ugly file even under the newer algorithms.
The additional $1K on the car note gets you nothing FICO wise, nothing DTI wise (unless you pay it off completely or darned close to zero for some lenders), and I would suggest isn't even a good financial decision anyway, not hard to beat 3% unless you're just stuffing money in a savings account or CD these days.
This versus saving the 2K:
- Larger downpayment = smaller LTV and reduced DTI
- Reserves are always handy when talking jumbo loan since by definition it's "let's make a deal" anyway if you get out of the agency high conforming loans
- You have more cash on hand for all the things post mortgage closing, like a couch or whatever, there will be some expenses.
In many respects cash is still king when it comes to getting a mortgage underwritten, definitely save the 2K, it's way more beneficial than doing anything with the car note.
@Anonymous wrote:So I went in the bank on Thursday and told the teller that I wanted to put $1,000.00 toward the PRINCIPLE on my car loan. She filled out a form and took the money and I left. I noticed later that night that the code on the form was for an INTEREST only payment. I went back on Friday and they corrected it and Im like I told you PRINCIPLE only and no response. HOW many people do this and never check the code and it is applied to the banks interest?
Generally I don't make principle payments; I still zero the current interest but there won't be that much and the corresponding interest charge will be smaller on the next regular payment too... also a regular payment can sometimes push the due date out into the future, which can be beneficial if you need to slide a couple months later.
But in your case as stated above, don't pay additional to the car note as it really gets you nothing.
