What should I do? Save $2k per month or pay down a car note?

[Anonymous]

My scenario is that I plan on purchasing a home next spring which will be a jumbo loan obviously. Now, I owe $32600 on a 2015 Silverado LTZ borrowed 38K 2 years ago. My payment is $575.00 per month. Now I went today and paid an extra $1,000.00 toward the principle of the loan and was planning on paying $2,000 a month in addition to my regular payment to pay down the loan. Should I save the $2k per month or pay down the truck? I do not owe anything else other than keeping 2 credit cards rotating paid in full each month. Would it be better to save the $2k per month or pay it on the truck? Thank you

[Anonymous]

I would hold the cash.  I have seen the terms and rates in my market flip several times from being worse than conforming to better and now luck of the draw.   I would have a casual chat with two jumbo lenders and see what they are looking for in downpayment and cash reserves. Also,  what are looking for you to pay out of pocket in closing costs? 

[Anonymous]

Thanks I plan on paying 100 to 125K down mininum. What do you mean rates and terms? What about my DTI with that amount owed on the truck? Thank you

[SouthJamaica]

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@Anonymous wrote:

My scenario is that I plan on purchasing a home next spring which will be a jumbo loan obviously. Now, I owe $32600 on a 2015 Silverado LTZ borrowed 38K 2 years ago. My payment is $575.00 per month. Now I went today and paid an extra $1,000.00 toward the principle of the loan and was planning on paying $2,000 a month in addition to my regular payment to pay down the loan. Should I save the $2k per month or pay down the truck? I do not owe anything else other than keeping 2 credit cards rotating paid in full each month. Would it be better to save the $2k per month or pay it on the truck? Thank you

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When the truck loan balance gets down to $3400 you'll be in the sweet spot maximizing your FICO 8 scores.

But I don't know if that also holds true for your mortgage scores.

[Revelate]

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?  

[Anonymous]

I have seen rates and terms change on jumbo loans change for a variety of reason ltv, downpayment % and $, 20 year/30 year  or arm, cash reserves .  credit scores , dti, closing costs rolled into loan  all can affect the pricing.   Where I live jumbos are not the norm and the local banks won't do them.  Here you call 3 loan  brokers and get 3 different loan programs.    One of my  ventures was flipping a $1MM house last year.  It was very stressful. Thats why I suggest talking to several lenders. In  some parts of the country jumbos are a way of life just not here. A 1/4 or 1/8 of a point on that large a loan makes a big difference.   

[Anonymous]

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@SouthJamaica wrote:

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@Anonymous wrote:

My scenario is that I plan on purchasing a home next spring which will be a jumbo loan obviously. Now, I owe $32600 on a 2015 Silverado LTZ borrowed 38K 2 years ago. My payment is $575.00 per month. Now I went today and paid an extra $1,000.00 toward the principle of the loan and was planning on paying $2,000 a month in addition to my regular payment to pay down the loan. Should I save the $2k per month or pay down the truck? I do not owe anything else other than keeping 2 credit cards rotating paid in full each month. Would it be better to save the $2k per month or pay it on the truck? Thank you

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When the truck loan balance gets down to $3400 you'll be in the sweet spot maximizing your FICO 8 scores.

But I don't know if that also holds true for your mortgage scores.

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$3400? I owe $31600 right now so you are saying I have to basically pay 27k on my truck before I maximize fico 8? thank you

[Anonymous]

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@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?  

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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

[Anonymous]

Bump for additional thoughts? Thanks

[Anonymous]

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?