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mreeves28xx · Joined: 27 Oct 2008 Posts: 5 4.84 Dollars($)

I been currently house shopping with a preapproval from a lender for awhile now. I know I am planning on buying a home within the next month or two. My question is this. In April '07 I purchased a car. At the time my credit was not the greatest and I had a 11% interest rate. Now my credit has improved quite abit and I know I could get a better interest rate. I like my car and want to keep it but would like to refinance it for a better interest rate. Would it hurt me in trying to do this while I am house shopping? I dont want to risk anthing doing this and at the same time I dont want to throw my money away on high interest payments. If anyone could share therethoughts on this for me I would appreciate it. Thanks in advance,.

Marvin

jameshogg · Posted: Tue Nov 18, 2008 11:06 pm Post subject:

Hi mreeves!

I think you should not go in for a refinance right now as you have already been pre-approved for a loan. Once you chose a house and decide to take the loan, the lender can again do a credit check and this refinancing may show up there and you may not get the loan.

Thanks.

gmakerley · Posted: Wed Nov 19, 2008 8:46 am Post subject:

i have a mixed opinion on this matter. your lender will want to know, prior to closing, if you have new credit. in this particular case, it would seem that it's advisable to refinance the car and take advantage of a reduced rate right away. i suppose it depends in part on the rate you can acquire. if you're a credit union member, you can probably get a rate somewhere in the vicinity of 6-7 per cent, which would be substantial savings for you. as long as the monthly payment on such a new loan isn't much different than what you're paying now, you'd be in great shape.

however, if you were to choose to take advantage of a higher payment amount to further cut your interest costs, that could affect your preapproval.

find out what you can do with refinancing, propose the deal to your mortgage lender before you do anything, and see what the reaction is. if the lender says "don't do it" then take them at their word.

steve2 · Posted: Wed Nov 26, 2008 2:21 pm Post subject:

I would stay away from any new financing while you are in the middle of shopping for a home. Underwriting guidelines change daily in this market, and you don't want to cripple yourself over something that could have been prevented.

You have been "wasting money" on this 11% rate for almost 2 years, the risk to your mortgage is greater than any reward you might receive through refinancing the car.

I might suggest that you really step up the shopping for a house though. Interest rates have gotten extremely aggressive recently, and deciding on a house sooner than later could save way more money than refinancing the car ever could.

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