topic Re: Regarding auto lease. in Mortgage Loans

Regarding auto lease.

Anonymous — Tue, 15 Jan 2008 02:48:22 GMT

I have a smart buy lease with GMAC, it ends Mar 08. I didn't know any better at the time when I got the lease. I am going to buy a house before the summertime, I have not gotten a preapproval or even a broker because I am not sure where I am going to buy the house. My question is this: I need my car, I could pay the balance of the lease, but that would bring my savings down to zero, if I refinance with GMAC will this affect my credit score, my scores are not that great, 655, 644, and 634. I am waiting to hear from two GW letters, and pay off two accounts. I have two negatives on my report, one 30 day late from Dec 06, and a paid collection from Aug 06. Has anyone dealt with a smart buy lease from GMAC.?

Thanks in advance.

Re: Regarding auto lease.

ShanetheMortgageMan — Thu, 17 Jan 2008 03:46:21 GMT

Is the smart buy lease a lease where you have the option to purchase the car at the end? If so, I thought most leases work like that. Mine through US Bank does at least.

You should definitely have savings when buying a home, even if the mortgage program doesn't require it, I'm not a big fan of someone being broke when they buy a home.

Can your debt to income ratio support the car payment? That is the question that would need answering in order to properly advise you if paying off the auto lease would be a smart move or not. What is your income, and is the car lease your only monthly payment? What is the car lease payment?

What sales price range are you looking to buy in? How much do you have saved up for the down payment?

What was the 30 day late in 12/06 from? Did the collection happen in 8/06 or is that when it was paid off? If it was paid off then, when did it go into collections?

Re: Regarding auto lease.

Anonymous — Thu, 17 Jan 2008 04:23:20 GMT

Yes the smart buy lease does give me the option to buy it outright or refinance it.

My income is around 73000, and right now my lease payment is 550. I have two credit cards one with a balance of 6000 and the other a balance of 1200 currently in good standing will be paid off in a few months.

I'm thinking of buying a home in the 200000-250000 range in Hampton Roads, Virginia area. I have about 15000 saved up at this moment but would like to use a VA home loan to eliminate down payment but use savings to furnish house and keep in savings as a cushion.

The 30 day late was from a credit card I have not been late since then and the card balance is zero. The collection started around 7/2006 as soon as I found out about it I paid it off, didn't know about PFD.

Re: Regarding auto lease.

booboo — Thu, 17 Jan 2008 05:00:28 GMT

lalaprecious,

Here are some options you could have with your Smart Buy. I'm not sure if you have a Smart Lease or the GMC Smart Buy. The difference being the Smart buy it titled in your name and it has a balloon payment at the end of term, so you basically own the car. You can keep the vehicle and pay the balloon payment, pay a small disposition fee and drop off the vehicle at the end of term, or possibly sell the vehicle yourself for more than what your balloon payment is and make a profit. What kind of car is it? What's the mileage and end of term balloon payment? I can let you know if it's possible to sell it and make some money.

If you have a Smart Lease than it's quite simple. You turn the car in at the end of term or you can purchase the car for your stated residual value. Although, keep in mind that depending on market conditions and what type of car you have your residual may be negotiable. You may want to consider just turning your car in and leasing a used car for a much lower payment. Currently you can lease a used 2007 Jeep Liberty with $1000 down for about $200 a month for a 36 month term. Let me know some specifics on you car and I can steer you in the right direction.

Re: Regarding auto lease.

ShanetheMortgageMan — Thu, 17 Jan 2008 11:14:13 GMT

Your debt ratio looks good for VA's 100% financing. The only thing about VA is, is that it wants clean credit for 12 months... the collection would fall outside of that time period, but the 30-day late would likely prohibit you from qualifying for VA. If you get approved via automated underwriting though, then the recent 30-day late wouldn't be an issue. After you've made your payments on time for a few months, I'd try writing the credit card company a goodwill letter, pleading for them to remove the 30-day late... then your chances would be excellent.

Re: Regarding auto lease.

Anonymous — Fri, 18 Jan 2008 02:20:12 GMT

Booboo,

My car is a 2004 Chevy Trailblazer, it has 47400 miles. The max that I can use is 48000. I do have the smart buy lease. I just dont want to have a new car lease or payment that will affect my fico score and it turn affect my chances of home ownership this year.

Re: Regarding auto lease.

Anonymous — Fri, 18 Jan 2008 02:21:17 GMT

Shane would getting approved through automated underwriting be a VA loan or something else?

Re: Regarding auto lease.

CreditDrama85 — Fri, 18 Jan 2008 03:58:09 GMT

i used to think leasing was wonderful but after leasing 3 cars....i dont think it is the best way to go IMHO....im still not 100% sure

advantages of leasing:

-new car very often

-lower monthly payment

-less maintenance headaches

-not having to worry about negative equity/being upside down in the loan

disadvantages of leasing:

-no ownership rights; cant re-sell if income fluctuates--stuck in contract

-excess mileage charges (if you drive 16-18k a year like me)

-not knowing what the future holds/the possibility of your lease ending when your fico isnt in such great shape

-higher insurance rates

Message Edited by CreditDrama85 on 01-17-2008 07:57 PM

Message Edited by CreditDrama85 on 01-17-2008 07:58 PM

Re: Regarding auto lease.

booboo — Fri, 18 Jan 2008 18:16:44 GMT

If you don't want a car payment after your lease is up, your only real option is to not have a car.... You could turn the car in and find something with a lower payment, purchase your current vehicle over a short term loan or just start taking the bus. I understand what your thinking and if you can afford not to have a car for a few months while your trying to get a mortgage, that would be your best bet. Otherwise, you are going to have a payment of some kind unless you pay cash, which I don't think you want to do if your considering buying a home.

Re: Regarding auto lease.

ShanetheMortgageMan — Sat, 19 Jan 2008 20:44:19 GMT

lalaprecious wrote:
Shane would getting approved through automated underwriting be a VA loan or something else?

For VA loans, you are first trying to qualify via automated underwriting... if you get a refer, then it can go in for a manual underwrite. The same for FHA. Conforming loan programs are approved via automated underwriting as well.