I am a first-time home-buyer, currently in the market for a home, and looking to begin proceeding on buying one particular home. I picked a home based on whether or not the monthly payments fit inside my budget, which is 35% of my take-home income for a housing. I am planning to move-in this December.
Now...currently I have 2 vehicles, both I make timely payments on. However, one is within my budget expense, and the other isn't.
The one that isn't within my budget expense I can't pay off by using the additional funds I'm qualified for in the mortgage. I can't pay the vehicle off either because of how much I owe.
The only way I can think of to get rid of this car, is to let it get repossessed. This would only start after I have moved in to my place and have paid my first mortgage payment.
Now...I know the damage this will do to my credit report, but my concern is, how will this effect my homeownership? Could I lose my home if I do this?
2007-11-26 10:15:44 · 5 answers · asked by outcast53080 1 in Business & Finance ➔ Renting & Real Estate
Have you tried to sell the vehicle and have the buyer take over the payments?
2007-11-26 10:28:00 · answer #1 · answered by Sharingan 6 · 0⤊ 0⤋
No, allowing the vehicle to be repossessed post closing cannot impact your mortgage loan unless the entity which has the loan against the vehicle sues for a deficiency judgement. Should they do that and succeed their judgment lien would become the second lien against the title which means that you would be required to pay them in full before you could get a home equity loan or when you sell the house.
This is, however, not a good idea. Even a voluntary repossession has an extremely negative affect on your credit score and if they proceed to judgment it will have an even longer impact.
Your lender is going to look at the debt against the vehicle when considering your debt to income ratio. It could preclude your qualification if the total of payments is too high.
You need to get your priorities straight and have the maturity to defer buying a home until such time as you can resolve the issue with the vehicle, hopefully by selling it and paying the difference necessary to clear the debt.
Good luck.
2007-11-26 18:27:03 · answer #2 · answered by mazziatplay 5 · 0⤊ 0⤋
As long as you make your house payments, your home is safe. The bad thing is that you will probably not get a home loan. The banks are real cleaver in figuring what you owe vs what you earn, and will figure out you can not make all of the payments. You would be far better off to sell the car, even at a loss, and pay off the loan. This will enable you to get a home mortgage and guard your credit rating!
2007-11-26 18:29:04 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Once you have obtained your mortgage and title to the home, anything you do will not change what has already occurred. However, you will still need to deal with the ramifications of the car repossession, and that might result in a judgment lien against the home you now own.
Furthermore, if you have future desires to refinance or obtain a HELOC, your trashed credit score will make that basically impossible.
Your problem is that you didn't budget properly for this new home. You forgot to include ONE outstanding liability.
2007-11-26 18:29:28 · answer #4 · answered by acermill 7 · 0⤊ 0⤋
If you do it AFTER you move into the home, it won't affect your home ownership at all.
The problem is it sounds like you may not qualify for your mortgage at all with both vehicles under your name.
However, be sure you get a fixed rate loan b/c you won't be able to refinance for awhile without paying out the nose.
Try selling it privately first.
2007-11-26 18:55:20 · answer #5 · answered by Expert8675309 7 · 0⤊ 0⤋