We also have recently purchased a new car. Our payments are $561 a month on the car. Would it be worth it to take some of what we make on the sale of the house to pay off or at least pay down the car loan. The interest rate on the car loan is 9% and we owe $33,000 on it. We hope to buy our next house for about $230 - 250 K and put down at least $35,000. Thanks
2007-09-14 06:48:29 · 8 answers · asked by Stephanie D 1 in Business & Finance ➔ Renting & Real Estate
We bought this house in 2004 in an up and coming area in Philadelphia for $122,500. We invested $50,000 into it. Recent sales of homes on our street have been from the $230 K to $250K without the upgrades that our house features. I am pretty confident on making the $75K on the house. How do you let a mortgage company know you will pay off a car to make your debt to income ratio more appealing?
2007-09-14 07:46:17 · update #1
You might want to think about this idea, take 33K of the 75K and pay off the car. You still have more than the 35K left for your downpayment on the house. THEN pay yourself for the car note. Pay yourself $500 a month into a high rate MMA (there are several online that earn 4.5-5.00% APY) then when you go to get a newer car in 4 or 5 years you have enough to pay cash and start the process over again.
2007-09-14 07:01:53 · answer #1 · answered by Craig T 6 · 1⤊ 0⤋
I just was curious if you've deducted realtor fees and closing costs from your expected profit. PLUS, the market is down - I'd just be careful at having such high expectations on your profit margin right now.
If you're right though, that's wonderful - you made a smart investment and it paid off. I just hope your profit figure is conservative so you're not counting on money you're not going to actually get.
I'm also concerned that you'd purchase a vehicle with such high payments. $561 a month is a LOT of money to pay for something you're only going to keep for a few years. I'm guessing you've crunched the numbers and can afford the increase in payments if you purchase, but the fact that you just bought such an expensive car may mean having to pay higher interest on your mortgage becuase they'll probably consider you a higher risk.
Pay off the car, DEFINITELY!
2007-09-14 14:02:45 · answer #2 · answered by Roland'sMommy 6 · 0⤊ 0⤋
Pay the car loan off. you dont get any tax benefit. To avoid paying mortgage insurance on the new house you have to have a down payment of 80%. So if you think you can do both then do so. Otherwise. Get a home loan as big as you can ( just up to 80%) pay off as much of the car as you can with the extra cash that is left over.
2007-09-14 13:55:08 · answer #3 · answered by Bob D 6 · 1⤊ 0⤋
For a $230 - $250 K house , you need $46K to $50K down or else you will be flushing $$$$ down the commode on PMI (and it is Not tax deductible) .
It is unfortunate that you had to get 9% note rate when some dealers are offering 0% but if you must have the vehicle . . .
Put $50K aside for down on the new place and put the balance onto the car note .
9% is just tooooo painful to hear .
Good Luck !
Also , the $33K car note may have pushed your debt to income level over the limit for taking out another mortgage .
Check your debt to income levels before you start on the next mortgage . ( will show on your FICOs)
Paying down the vehicle may be a requirement to even qualifiying for the next home loan .
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2007-09-14 13:56:23 · answer #4 · answered by kate 7 · 2⤊ 0⤋
You could pay something extra on the car if you wanted to. Be sure though that you have enough put back for a good down payment and closing costs for your next house.
2007-09-14 13:52:47 · answer #5 · answered by Judy 7 · 2⤊ 0⤋
I would pay off the car if you can. Interest on a vehicle is tax deductable, where has home interest is.
2007-09-14 13:54:55 · answer #6 · answered by Midwest guy 4 · 0⤊ 1⤋
What's the question? Sounds like you've got it worked out.
2007-09-14 13:52:21 · answer #7 · answered by Makes Sense 3 · 3⤊ 0⤋
what do u drive?? a bently??
2007-09-14 13:53:35 · answer #8 · answered by Anonymous · 3⤊ 0⤋