I am looking to refinance my house to take advantage of a lower intrest rate. We are also in the need of a different vehicle. (car seats don't fit too well in a sports car). My question is.... Do we refinance our house first or get the car first. I was thinking that my FICO may drop a little if we did the refi first and therefore when I go for the vehicle I may not get the best rate. I am beginning to think that I should do the refi first because it shouldn't drop it too much. Who knows. In the infamous words of GEORGE, "Random Number Generator" Let me know what you all think
Well, I'm doing the refinance first, getting cash out to pay off CC debts, and hopefully after about 3 months, trying for a vehicle loan. It sticks in my craw a little bit to cash equity out and convert unsecured debt to secured debt, but my utilization ratio is too high, I'm 6 years out of Ch. 7 bankruptcy, the CC debt interest is 15-22%, and we really need to replace our 12 yr. old mini-van. My scores are in the 600's and I'm hoping to get a good enough boost in my scores to get a decent vehicle loan rate. If that's problematic, I'll probably wait until my bankruptcy accounts roll of the credit report 1/04 and try again. I am in no way implying or assuming your situation is similar to mine but just thought I'd run my thought process by you. Hopefully, others can comment to your benefit but they may want to know: Do you have any other debt load ? Any credit score constraints ? Good Luck ! P.S. There is a "Mortgage" forum over at (dare I say it ?) creditboards.com.
Hi crofttk, Chapter 7 bankruptcy filings stay on the credit report for 10 years ... not 7 .... You were saying you were 6 years out of BK-7, and were projecting jan 2004 as date it falls off the CR, that's how I got that you are assuming 7 years. -- lakpr
Will you have enough equity left in your home after you refinance to take out an HELOC, enough to buy a vehicle? If so, I will suggest that route. I am a big proponent of matching the repayment period on any loan with the underlying security's depreciation schedule. With this rule in mind, a 30-year repayment period on a house makes sense, but does not make sense for a vehicle. This is the reason why I am not suggesting a cash-out refinancing (if you use proceeds from a cash-out to buy vehicle, you would be paying for the car long after it's dead) If you take out a HELOC, it will stand out as a separate loan, and can give you enough motivation to repay it as early as possible, preferably within 4 years, thus matching the depreciation timetable on a vehicle. You can get attractive interest rates too... And obviously, I'm advising you to get the refinancing done first. If the lender sees a brand new loan quite recently on your refi application, your application may get rejected. Why take that risk? Best of luck, -- lakpr
Re: Re: Refinancing Mort vs. New Car Continuing my previous post ... You can even get both refi and HELOC done at the same closing ... thus all you will have is a single inquiry on your credit report. Just a thought.
Re: Re: Refinancing Mort vs. New Car lakpr: As you quoted me, I said bankruptcy accounts , not bankruptcy public record . As I understand, the PR stays 10 years, but the BK accounts, like any other derogatorily notated accounts, can stay no more than 7. My (perhaps shaky) assumption at this point is that the accounts rolling off with only the PR remaining will significantly help my scores. Kenn
leencaci From a mortgage standpoint you should do the refinancing of the house first. The car loan will cause your debt ratio to rise and that can adversely affect your ability to obtain a good mortgage. I do not know your situation as you haven't expounded upon it so this is just a generic response. fla-tan
crofttk At this point your bankruptcy should have minimal impact upon your credit. As long as your scores are in the mid 600s and there have been no lates or collections on your credit since bankruptcy you should be able to qualify for a conventional conforming mortgage. Current 30 year fixed rates for conforming mortgages are, depending on other factors, around 6% or even a little less. BTW, in your situation I don't think it should stick in your craw. Just make sure that you don't let those high interest cc's get back up there again. Good luck to you. fla-tan
Re: Re: Refinancing Mort vs. New Car fla-tan: Thanks for the input: Yes, we did get that. Our closing is scheduled Wed. 4/23. We went back to the same guy who did our original purchase in 7/99 at the 24 mo. out of BK mark. We locked in a 6.25% (0 pts.) on 3/20. The appraisal on the house came out so high that we went ahead and paid (rolled into the mortgage) 3 more pts. to get 5.625%. Agreed, we recognize the trap. But we've gained a budget discipline over the last few years that we will use to avoid that ! Thanks !
Re: Re: Re: Refinancing Mort vs. New Car You are correct that bankruptcy accounts fall off after 7 years while the public record stays for 10 years. So, oops, my mistake, you are correct and my apologies... Best of luck
