Want to try for a Mortgage, should I refi my car loan now or wait?

[Anonymous]

Hi all! I still owe 18,000 in my car loan, I was thinking of paying $10,000 toward it and trying to refi the loan (because my payments are on the high side right now).  Would I be better off holding off until after I get my family into a house or should I do it now?  The reason I'm considering it, is because I might be able to qualify for more house with a lower car payment.  On the other hand, I'm alittle worried if I do refi, it would restarting my "clock" on the installment loan. (It's been 2 yrs since its been reporting on my CR with no lates). 

Any help would be great! Thanks

[namvet]

IMO i would work on getting ready for the mortgage app and put all credit transactions on hold until you get your mortgage closed. 

[JusdoNit]

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@namvet wrote:

IMO i would work on getting ready for the mortgage app and put all credit transactions on hold until you get your mortgage closed. 

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Sounds like some great advice.  I am going to use this one for myself

[Pap22]

You can use this calculator to find out if the lower car payments will indeed let you qualify for more house:

http://realestate.yahoo.com/calculators/afford.html

If it doesn't, you'll probably be better off saving that money for the mortgage down payment or future housing expenses. 

Assuming similar low interest rates, rather than refinance the car loan I would pay down the principal. This way you don't incur the hit of:

1. An inquiry
2. A new account lowering your AAoA, and
3. The clock being reset to the beginning of a "new" loan, thus increased risk (as lenders see it).

Make sure you talk to your bank about how to go about paying down the principal. Otherwise they will simply apply the extra payment as credit for future payment, but your monthly amount owed will remain unchanged:

http://www.bankrate.com/brm/news/debt/20050520a1.asp

Let me know if this helps! 

[Anonymous]

Thank you all so much for the advice.  I'll definitely be holding off until after we secure a home