Refinance advice needed

[dealcatcher]

I'm planning on refinancing our house in the next week or two and we also have a car that we're picking up from the dealer today. I know it's best to purchase the car after the refi so as to get the best rate possible but things didn't work out that way. Our credit scores are pretty high (780+) and I need some advice on the following:

We've saved enough cash to pay down a good chunk of our principal so we can refi down to a 15yr without changing our current monthly mortgage. We can also pay for the car in cash but I can get an attractive 1.59% on the auto loan which is why I would prefer to put more cash towarsds the house instead of paying off the car. However, I'm a bit worried that taking out a car loan before I refi is a bad decision. Should I pay the car in cash (even though the rate is lower) so as to not adversely affect the refi? Any advice you can shed would be appreciated!

 

[sgip]

If you finance the vehicle, you run the uncertain risk of lowering your credit score by 20-30 points with new debt (the inquiry has a meaningless score impact BTW)

If this was my same scenario:

1) Have an internet lender run my credit now and lock the rate. Low margin internet lenders have the better 15-10 year refi rates than big banks. Make sure they approve the file in house and do not require their "investor" to review the loan once locked. Get all of this in writing. Better hurry because rates have spiked....

2) Post lock, finance the car. Be sure to tell your lender.

3) Or.... pay cash for the vehicle. Better to have zero debt on a car to free up cash to pay your house note down IMHO.

SGIP

 

[dealcatcher]

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[dealcatcher]

If you finance the vehicle, you run the uncertain risk of lowering your credit score by 20-30 points with new debt (the inquiry has a meaningless score impact BTW)

If this was my same scenario:

1) Have an internet lender run my credit now and lock the rate. Low margin internet lenders have the better 15-10 year refi rates than big banks. Make sure they approve the file in house and do not require their "investor" to review the loan once locked. Get all of this in writing. Better hurry because rates have spiked....

2) Post lock, finance the car. Be sure to tell your lender.

3) Or.... pay cash for the vehicle. Better to have zero debt on a car to free up cash to pay your house note down IMHO.

SGIP

Thanks for the input, SGIP!!! The problem is that I pickup the car today. Would I be able to lock with a lender like Amerisave as early as this morning? Any other online lenders you would recommend I check with?

When it comes to getting the best rate, is it true that I just need to have a score above 740? Also, will they take the higher of me or my wife's credit scores or will they just take an average of the two?

 

[sgip]

Thanks for the input, SGIP!!! The problem is that I pickup the car today. Would I be able to lock with a lender like Amerisave as early as this morning? Any other online lenders you would recommend I check with?

Ask Amerisave about their policies.....

Really, any on-line lender is working Saturdays and can lock same day. Small lender you've never heard of with sexy low rates? Avoid. Don't go cheap on this important issue. It will cost more in the end.

When it comes to getting the best rate, is it true that I just need to have a score above 740? Also, will they take the higher of me or my wife's credit scores or will they just take an average of the two?

All lenders take the lowest middle of all borrowers scores.

SGIP

 

[usctrojancpa]

Yeah can also get a car loan on a car that is paid off in full so you can get the car loan after your refi closes.  I've done that before where I bought the car for cash and then got a PenFed car loan on it.  Slight downside is your rate on the car loan will be in the 2% range. 

 

[dealcatcher]

Yeah can also get a car loan on a car that is paid off in full so you can get the car loan after your refi closes.  I've done that before where I bought the car for cash and then got a PenFed car loan on it.  Slight downside is your rate on the car loan will be in the 2% range.

Good point! Thanks for the advice SC.

 

[usctrojancpa]

Yeah can also get a car loan on a car that is paid off in full so you can get the car loan after your refi closes.  I've done that before where I bought the car for cash and then got a PenFed car loan on it.  Slight downside is your rate on the car loan will be in the 2% range.

Good point! Thanks for the advice SC.

The interest difference will be fairly small for the peace of mind that you'll benefit from with an easier refi.