Will refinancing my auto loan hurt my mortgage approval or help it?
"Generally it is not recommended that you do anything potentially short-term deleterious to your credit during the process of seeking a mortgage loan - such as opening a new account, closing old accounts, running up balances, or otherwise applying for any kind of loan (people often get carried away and apply for loans to cover furniture and appliances for the new home they haven't bought yet). You are usually OK to do things that have at least a short-term positive effect, like paying down debt. But refinancing - which would require applying for a non-home loan - is exactly the sort of hard-pull that can drop your credit rating. It is not generally advised. The exception to this is would be if you have an especially unusual situation with an existing loan (like your car), that is causing a deal-breaking situation with your home loan. This would for example be having a car payment so high that it violates maximum Debt-to-Income ratios (DTI). If your monthly debt payments are more than 43% of your monthly income, for instance, you will generally be unable to obtain a ""qualified mortgage"", and over 28-36% will disqualify you from some lenders and low-cost mortgage options. The reason this is unusual is that you would have to have a bizarrely terrible existing loan, which could somehow be refinanced without increasing your debt while simultaneously providing a monthly savings so dramatic that it would shift your DTI from ""unacceptable"" to ""acceptable"". It's possible, but most simple consumer loan refis just don't give that kind of savings. In most cases you should just ""sit tight"" and avoid any new loans or refinances while you seek a home purchase. If you want to be sure, you'll need to figure out your DTI ratio (which I recommend anyway) and see where you would be before and after a car refinance. If this would produce a big swing, maybe talk with some mortgage loan professionals who are familiar with lending criteria and ask for their opinion as to whether the change would be worth it. 9 times out of 10, you should wait until after your loan is closed and the home is yours before you try to refinance your car. However I would only warn you that if you think your house + car payment is too much for you to comfortably afford, I'd strongly recommend you seriously reconsider your budget, current car ownership, and house purchasing plans. You might find that after the house purchase the car refi isn't available either, or fine print means it wouldn't provide the savings you thought it would. Don't buy now hoping an uncertain cost-saving measure will work out later."
HARP is the Home Affordable Refinance Program. Announced in March 2009, HARP is a federally funded government program designed to help the 5 million homeowners who currently owe more on their mortgage then their home is currently worth, otherwise known as being underwater or near-underwater, refinance their mortgages into a fixed loan with a lower monthly payment. However, as of Aug. 31, only 894,000 borrowers have refinanced through HARP. The simple answer is that you are correct. You should not purchase a house until you are financially stable enough to do so. A house is an asset that you must maintain, and it can be expensive to do so.  Over the long term, you will generally save money by purchasing. However, in any given year you may spend much more money than a similar rental situation - even if the rent is higher than your mortgage payment. If you are financially stable with good cash savings or investments plus a 20% down payment, then anytime is a good time to buy if that is part of your financial plan. As of now in 2016, is is safe to assume that mortgage rates   would/should not get back to 10%?   Does this mean that one should always buy a house ONLy when mortgage   rates are low? Is it worth the wait IF the rates are high right now? The mortgage rates are not the primary driver for your purchase decision. That might be like saying you should buy everything on sale at Target... because it's on sale. Don't speculate on future rates. Also, keep in mind that back when rates were high, banks were also giving much better savings/CD rates. That is all connected.  Is refinancing an option on the table, if I made a deal at a bad time   when rates are high? You need to make sure you get a loan that allows it. Always do a break-even analysis, looking at the money up-front you spend to refi vs the savings-per-year you will get. This should give you how many years until the refi pays for itself. If you don't plan on being in the house that long, don't do it. How can people afford 10% mortgage? Buying a house they can afford, taking into consideration the entire payment+interest. It should be a reasonable amount of your monthly income - generally 25% or less. Note that this is much less than you will be 'approved' for by most lenders.  Don't let good rates suck you into a deal you will regret. Make sure you have the margin to purchase and maintain a home. Consider where you want to be living in 5 years. Don't leave so little financial breathing room that any bump will place you at risk of foreclosure.  That said, home ownership is great! I highly recommend it. If I was an upside down homeowner and I went to my bank to refinance the mortgage at a lower rate and they declined, I'd give them the middle finger by not paying the mortgage and declaring bankruptcy.    A homeowner has no incentive to continue paying a mortgage for a home that is no longer the value of the mortgage and if the bank is unwilling to work with the upside down homeowner to get the home owner a lower interest rate (that is the least the bank could do) - then make the home the bank's problem and let them eat their cake.   This home owner is not asking the bank to forgive part of the mortgage or write it off, but asking for his mortgage to be refinanced at the lower rate - that is pretty straight forward and simple. We as taxpayers bailed the banks out in 2008, the least they could do is help upside down homeowners. The banks reluctance to help upside down homeowners is why we have a stagnant housing market.   **The bank by not working with this home owner to refinance his mortgage at a lower interest rate is a bank that indicates they don't care about having a paying customer.** "In your particular condition could buy the condo with cash, then get your mortgage on your next house with ""less than 20%"" down (i.e. with mortgage insurance) but it would still be an owner occupied loan.  If you hate the mortgage insurance, you could save up and refi it when you have 20% available, including the initial down payment you made (i.e. 80% LTV ratio total).  Or perhaps during the time you live in the condo, you can save up to reach the 20% down for the new house (?).  Or perhaps you can just rent somewhere, then get into the house for 20% down, and while there save up and eventually buy a condo ""in cash"" later.  Or perhaps buy the condo for 50% down non owner occupied mortgage... IANAL, but some things that may come in handy: you don't have to occupy your second residence (owner occupied mortgage) for 60 days after closing on it.  So could purchase it at month 10 I suppose.  In terms of locking down mortgage rates, you could do that up to 3 months before that even, so I've heard.   It's not immediately clear if ""rent backs"" could extend the 60 day intent to occupy, or if so by how long (1 month might be ok, but 2? dunno) Also you could just buy one (or the other, or both) of your mortgages as a 20% down conventional ""non owner occupied"" mortgage and generate leeway there (ex: buy the home as non owner occupied, and rent it out until your year is up, though non owner occupied mortgage have worse interest rates so that's not as appealing).  Or buy one as a ""secondary residency"" mortgage?  Consult your loan officer there, they like to see like ""geographic distance"" between primary and secondary residences I've heard. If it's HUD (FHA) mortgage, the owner occupancy agreement you will sign is that you ""will continue to occupy the property as my primary residence for at least one year after the date of occupancy, unless extenuating circumstances arise which are beyond my control"" (ref), i.e. you plan on living in it for a year, so you're kind of stuck in your case.  Maybe you'd want to occupy it as quickly as possible initially to make the year up more quickly :) Apparently you can also request the lender to agree to arbitrarily rescind the owner occupancy aspect of the mortgage, half way through, though I'd imagine you need some sort of excuse to convince them.  Might not hurt to ask." "Hard pulls you give your explicit permission to run do affect your credit.  Soft pulls do not. While hard pulls affect your score, they don't affect it much.  Maybe a couple few point for a little while.  In your daily activities, it is inconsequential.  If you are prepping to get a mortgage, you should be mindful. Similar type hard pulls in a certain time window will only count once, because it is assume you are shopping.  For example, mortgage shopping will result in a lot of hard pulls, but if they are all done in a fortnight, they only count against once.  (I believe the time window is actually a month, but I have always had two weeks in my head as the safe window.) The reason soft pulls don't matter is because businesses typically won't make credit decisions based on them.  A soft pull is so a business can find a list of people to make offers to, but that doesn't mean they ACTUALLY qualify.  Only the information in a hard pull will tell them that.  I don't know, but I suspect it is more along the lines of ""give me everybody who is between 600 and 800 and lives in zip code 12344"" not ""what is series0ne's credit score?"" A hard pull will lower your score because of a scenario where you open up many many lines of credit in a short period of time.  The credit scoring models assume (I am guessing) that you are going to implode.  You are either attempting to cover obligations you can't handle, or you are about to create a bunch of obligations you can't handle. Credit should be used as a convenient method of payment, not a source of wealth.  As such, each credit line you open in a short time lowers the score.  You are disincentivized to continue opening lines, and lenders at the end of your credit line opening spree will see you as riskier than the first." "Let's assess the situation first, then look at an option: This leaves you with about $1,017/mo in cash flow, provided you spend money on nothing else (entertainment, oil changes, general merchandise, gifts, etc.) So I'd say take $200/mo off that as ""backup"" money. Now we're at $817/mo.  Question: What have you been doing with this extra $800/mo? If you put $600/mo of that extra towards the 10% loan, it would be paid off in 12 months and you would only pay $508 in interest. If you have been saving it (like all the wisest people say you should), then you should have plenty enough to either pay for a new transmission or buy a ""good enough"" car outright.  10% interest rate on a vehicle purchase is not very good. Not sure why you have a personal loan to handle this rather than an auto loan, but I'll guess you have a low credit score or not much credit history.  Cost of a new transmission is usually $1,700 - $3,500. Not sure what vehicle we're talking about, so let's make it $3,000 to be conservative.  At your current interest rate, you'll have paid another $1,450 in interest over the next 33 months just trying to pay off your underwater car.  If you take your old car to a dealership and trade it in towards a ""new to you"" car, you might be able to roll your existing loan into a new loan. Now, I'm not sure when you say personal loan if you mean an official loan from a bank or a personal loan from a friend/family-member, so that could make a difference. I'm also not sure if a dealership will be willing to recognize a personal loan in the transaction as I'd wager there's no lien against the vehicle for them to worry about. But, if you can manage it, you may be able to get a lower overall interest rate. If you can't roll it into a new financing plan, then you need to assess if you can afford a new loan (provided you even get approved) on top of your existing finances. One big issue that will affect interest rates and approvals will be your down payment amount. The higher it is, the better interest rate you'll receive. Ultimately, you're in a not-so-great position, but if your monthly budget is as you describe, then you'll be fine after a few more years. The perils of buying a used car is that you never know what might happen. What if you don't repair your existing car, buy another car, and it breaks down in a year? It's all a bit of a gamble. Don't let your emotions get in the way of making a decision. You might be frustrated with your current vehicle, but if $3,000 of repairs makes it last 3 more years, (by which time your current loan should be paid off), then you'll be in a much better spot to finance a newer vehicle. Of course it would be much better to save up cash over that time and buy something outright, but that's not always feasible.  Would you rather fix up your current car and keep working to pay down the debt, or, would you rather be rid of the car and put $3,000 down on a ""new to you"" car and take on an additional monthly debt? There's no single right answer for you. First and foremost you need to assess your monthly cash flow and properly allocate the extra funds. Get out of debt as soon as reasonably possible." "When you refinance, there is cost (guess: around $2000-$3000) to cover lawyers, paperwork, surveys, deed insurance, etc. etc. etc. Someone has to pay that cost, and in the end it will be you. Even if you get a ""no points no cost"" loan, the cost is going to be hidden in the interest rate. That's the way transactions with knowledgeable companies works: they do business because they benefit (profit) from it. The expectation is that what they need is different from what you need, so that each of you benefits. But, when it's a primarily cash transaction, you can't both end up with more money. So, unless value will be created somewhere else from the process (and don't include the +cash, because that ends up tacked onto the principle), this seems like paying for financial entertainment, and there are better ways to do that." "What are the fees associated with changing the new loan? Are those fees worth the peace of mind? If so, than it is not ""crazy"".  The decision really boils down to that: is it worth the money that you will spend refinancing the loan to not have to deal with the original bank that financed your loan, assuming that you find an institution that will be more amenable to your financial expectations."