Posted on: 11th Jan, 2013 12:44 pm
Hi, I have less than 2 years remaining on my 0% interest car loan. The monthly payment is around $380
I have the cash to pay that off right now, but I can save more interests if I put that amount into the down payment instead. (I already have the 20% downpayment with or without this payoff)
Not sure how loan office will treat this car payment as far as DTI goes. (It only lasts 2 years, not 30)
So, in order to maxiumize the loan amount I can get, does it make sense for me I payoff the car loan now? For example: if I spent $7500 to payoff the car loan now (get rid of that $380 monthly payment), will the bank will grant me an 'Additional' $70,000 in loan amount for a 30 year mortage ( that translates into an additional $314 a month for the next 30 years at 3.5% )
I have the cash to pay that off right now, but I can save more interests if I put that amount into the down payment instead. (I already have the 20% downpayment with or without this payoff)
Not sure how loan office will treat this car payment as far as DTI goes. (It only lasts 2 years, not 30)
So, in order to maxiumize the loan amount I can get, does it make sense for me I payoff the car loan now? For example: if I spent $7500 to payoff the car loan now (get rid of that $380 monthly payment), will the bank will grant me an 'Additional' $70,000 in loan amount for a 30 year mortage ( that translates into an additional $314 a month for the next 30 years at 3.5% )
It would depend on the DTI that you have with the car. If the DTI is under 45% with the car, then paying it off would not affect the loan. More down payment = lower mortgage payment, so that would be your option. If it was my loan, and I had the funds to pay it off, and pay the 20% down, and still have savings, I would recomend paying off the car. Good luck
the loan officer can run your file for approval with the 'assumption' that the car is paid or not.... and tell you concretely what effect it will have.
but, yes... no car pmt will raise you approval amount in most cases. maybe not as you figured, because property taxes were not considered in your example.
property taxes affect dti
but, yes... no car pmt will raise you approval amount in most cases. maybe not as you figured, because property taxes were not considered in your example.
property taxes affect dti
I will also suggest you to pay down the car loan. Though it may lower down the loan approval but not by as much as you have thought.
Thanks, I will try to work with a loan officer and have him run two cases with or without this car loan being paid off.
If it would not grant me an additional 50K+ in loan amount, then it does not make much sense for me to paid off a 0% interest loan and then get a mortgage at a higher interest rate for that amount.
ps: how long do I have to wait after I paying off the car loan before the loan officer can verify that?
If it would not grant me an additional 50K+ in loan amount, then it does not make much sense for me to paid off a 0% interest loan and then get a mortgage at a higher interest rate for that amount.
ps: how long do I have to wait after I paying off the car loan before the loan officer can verify that?
Hi zhwu!
Welcome to forums!
It is difficult to tell you the exact time as to when the loan officer can verify that. It might take few weeks time.
Sussane
Welcome to forums!
It is difficult to tell you the exact time as to when the loan officer can verify that. It might take few weeks time.
Sussane