Overhaulin'

refinance car or get home loan?

Ok, so here is the scoop. I live in Phoenix Arizona, I'm 23 and I do fairly well for myself. I have a 2005 BMW 330i that I bought last year and my credit score was terrible back then. Somewhere around 590 or 600. I'm paying a 14.99% interest rate and my payment is 645$. I can easily pay this, but I realize that now, since my credit score(according to Equifax) is now over 700, I could probably get a much better interest rate if I refinanced. I'm not sure if this reduces my Debt to Income ratio. If its calculated on a monthly basis, then it probably would. Most of my accounts on my credit are only from the last couple years, and I have a few already in this last year so I don't really want to go and open a new one all that bad in fear it will hurt my score. In January, My lease will be up on my house(for the 3rd full year) and I plan on purchasing my own. Should I wait till I get my home loan? Or would it be wiser to wait refinance and try to get my DTI down? (I make ~8k/month) Also, if anyone out there could give me a general Idea on how much I might qualify for(as far as dollar amount is concerned) that would be great as well. Thanks! If you need more info from me let me know. To help give you a better idea, the car was purchased for $23,000. My previous car unfortunately was upside down 5k. + tax title etc it was a 31k car loan. Its down to $28000. but now since I drive double the normal milage, the car is now only worth about 18-20k. Does that hinder my ability to refinance? Isn't the most important thing wether i'm able to make the payment? I've been making a 645$ monthly payment with ease and always on time. Its an automatic deduction.

Public Comments

1. Why not do both. Refinance your car loan do the math. It depends ho wmuch you owe. Refinance the car loan so you have less out of pocket per month but keep paying the same amount you had in the past to pay off your depreciating asset (car) asap. Then see if you can get a loan to buy a house. The debt to income ratio has to do with the monthly payment account when compared to your gross income