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Should I refinance a car loan before I apply for a mortgage?
I need to refinance my car to get out of a high-interest car loan—but I'm also shopping around for a new home. Should I refinance the car loan first? Or should I buy the home first?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Congratulations on a huge step in your life!
As far as refinancing your
car loan
before you get a mortgage, the choice is highly dependent on several factors. Ask yourself these questions:- Will the refinance lower my debt-to-income ratio?
- Will my debt go up as a result of refinancing? (This is usually the case of taking a cash-out loan)
- Is your credit score good enough to absorb a five to 10 point hit from a hard inquiry?
These questions will guide you in the right direction. In general, going house shopping before car shopping is the better idea, since it can be much more difficult to obtain a mortgage than refinance a loan you already have. However, it all depends on your personal circumstances!
If you want to free up some money for a down payment, this is probably a great time to review your car insurance policy. The easiest way to do this is with the
Jerry
app—we’ll get you customized quotes from top insurers in seconds, so all you have to do is choose the one that works best for you.Best of luck, and congrats again on a huge milestone!
View full answer
- Gregory R.
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