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We're selling our house and moving to Seattle. As part of the move, we'll use some of our home equity gains to pay off a car loan, which has a payment of $750 a month. That will go to zero. Is there anyway to convey this to the lender?
One thought we had was this: We have a home equity line of credit sitting unused. We could pay off the car loan using the line of credit and the car loan balance would only sit for a few months. The monthly payment on the equity line drops to $250. Plus, a lender should understand that we'd have to pay off the credit line when selling our old house and buying a new house. So, this move drops the monthly payment, helps the financial picture, but also ensures and conveys that we intend to move that payment to zero asap.
Any reason to NOT payoff the car loan using the line of credit? Credit score impact that I'm not thinking of?
Appreciate any guidance! Seattle is expensive relative to Atlanta so we are thinking ahead about how to situate ourselves in a slightly higher mortgage (most likely).
We're selling our house and moving to Seattle. As part of the move, we'll use some of our home equity gains to pay off a car loan, which has a payment of $750 a month. That will go to zero. Is there anyway to convey this to the lender?
One thought we had was this: We have a home equity line of credit sitting unused. We could pay off the car loan using the line of credit and the car loan balance would only sit for a few months. The monthly payment on the equity line drops to $250. Plus, a lender should understand that we'd have to pay off the credit line when selling our old house and buying a new house. So, this move drops the monthly payment, helps the financial picture, but also ensures and conveys that we intend to move that payment to zero asap.
Any reason to NOT payoff the car loan using the line of credit? Credit score impact that I'm not thinking of?
Appreciate any guidance! Seattle is expensive relative to Atlanta so we are thinking ahead about how to situate ourselves in a slightly higher mortgage (most likely).
If you buy a new house before selling the old one, you'll have to qualify for all mortgage(s) at the same time.
Sell old house, pay off car loan with proceeds, then buy new one. You can do either a rent-to-own on the new house, a bridge loan, or a sale with rentback on the old house if you don't want to move twice. But the bridge loan won't work if the DTI is too high, including all the loans at the same time.
We're selling our house and moving to Seattle. As part of the move, we'll use some of our home equity gains to pay off a car loan, which has a payment of $750 a month. That will go to zero. Is there anyway to convey this to the lender?
One thought we had was this: We have a home equity line of credit sitting unused. We could pay off the car loan using the line of credit and the car loan balance would only sit for a few months. The monthly payment on the equity line drops to $250. Plus, a lender should understand that we'd have to pay off the credit line when selling our old house and buying a new house. So, this move drops the monthly payment, helps the financial picture, but also ensures and conveys that we intend to move that payment to zero asap.
Any reason to NOT payoff the car loan using the line of credit? Credit score impact that I'm not thinking of?
Appreciate any guidance! Seattle is expensive relative to Atlanta so we are thinking ahead about how to situate ourselves in a slightly higher mortgage (most likely).
Use the equity line to pay the car off now. Lender can do a Credit Bureau Update for you, which will register not only the payoff, but also a likely increase in credit scores, so as to optimize rate/terms at lock. Not saying you need that, but the process can be completed 3-4 days after you pay off the account. Then you can either qualify with both house payments, or do some form of simultaneous close. Welcome to the PNW.
Use the equity line to pay the car off now. Lender can do a Credit Bureau Update for you, which will register not only the payoff, but also a likely increase in credit scores, so as to optimize rate/terms at lock. Not saying you need that, but the process can be completed 3-4 days after you pay off the account. Then you can either qualify with both house payments, or do some form of simultaneous close. Welcome to the PNW.
Appreciate any guidance! Seattle is expensive relative to Atlanta so we are thinking ahead about how to situate ourselves in a slightly higher mortgage (most likely).
If you pay off the $750 car loan just to qualify for a higher mortgage, will you get into another $750 payment years from now when you want another car? If so, ask them to include that into their calculation so you don't over extend yourself. If you are at the maximum loan after paying off the car, then you get a new one car, your DTI will be out of whack and you lose the ability to refinance or complicates buying another house.
I know you said it was a car LOAN but is it a Lease or will you own it when you pay it off?
If it's a Lease they will still count the payment against you.
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