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 gakyle1
Joined: 23 Feb 2007
Posts: 1
1.33 Dollars($)
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 Posted: Fri Feb 23, 2007 8:25 pm Post subject: Pay off auto loan before applying for mortgage? |
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| I have a tax lien that was paid off in March 2006. No other late payments on credit cards ($0 balances) or on auto loan ($3500 balance). My credit score is 700. Will I have any problem getting a mortgage? Will paying off the remaining auto loan help? Thank you. |
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mcole
Community Experts
Joined: 11 Oct 2006
Posts: 53
18.36 Dollars($)
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| Posted: Sat Feb 24, 2007 9:55 am Post subject: |
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Obviously, a lot depends on your employment, your income, the amount of loan you're trying to get, etc. But based on the information you have provided, you shouldn't have any problem getting a loan.
My recommendation would be to NOT pay off the auto loan. Depending on how many other open trade lines you have, paying it off could actually hurt you.
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Guest
0.10 Dollars($)
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| Posted: Sat Feb 24, 2007 10:14 am Post subject: |
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Thank you. I understand that part of the FICO score formula includes having different categories of debt that I've handled responsibly.
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Caron
Moderator
Joined: 19 Jul 2005
Posts: 1403
Location: florida
235.65 Dollars($)
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| Posted: Mon Feb 26, 2007 1:15 am Post subject: RE: does tax lien affect getting a home loan |
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Hi Gakyle,
Except in Mexico, in all other states, a tax lien is given priority over a mortgage. But as you have already paid it off, so getting a mortgage will not be impossible. But surely it can affect your credit score in the credit report for many years after you have paid off the tax lien.
Currently your credit score looks to be a good one to get a mortgage. So, I don't think there will be much of a problem.
Some lenders may object to the tax lien but then as it is paid off, they may offer you slightly higher rate of interest. And, repaying the auto loan may help provided the repayment period is exceeded. But if there is still some time left to pay off the auto loan, you can carry on with it.
Good luck 
Caron.
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carnahandavid
Joined: 21 Dec 2006
Posts: 239
58.40 Dollars($)
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| Posted: Mon Feb 26, 2007 12:24 pm Post subject: |
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| Quote: | | My credit score is 700. Will I have any problem getting a mortgage? Will paying off the remaining auto loan help? Thank you. |
Your credit score of 700 is quite good to get a mortgage and if you have a stable income then getting a mortgage with good rates will not be too difficult. I agree with others that paying off the auto loan balance will not be a great idea just before applying for the mortgage. Instead of paying it off keep the payments regular on it that will help your score to improve further.
David |
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