Should I pay off my car loan or pay down the principal of my mortgage?

Credit and mortgage advice Forums Home Mortgage Should I pay off my car loan or pay down the principal of my mortgage?


This topic contains 13 replies, has 8 voices, and was last updated by  Anonymous 8 years, 4 months ago.

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  • #410220



  • #410221


    loan processor processes the loan application – they shop it to various mortgage companies (lenders) to find a deal that’s good for you and them (they get a commission). closing dates are set by agreement between the buyer and seller and can be delayed by the loan processing/escrow processes. if you’re worried about moving on a certain date, it’s best to have some flexibility built in so you are left in limbo. if moving out of a rental unit they can’t make you go until you’re ready and you’ll have to pay for the extra days you stay. if you’ve sold and have new people moving in, they’ll have to wait. don’t let anyone strong arm you.

  • #410222


    A loan processor orders all documents needed for the loan, like appraisal, employment verification, etc. An underwriter approves or declines a loan.

    A closing date to be changed is very common & it could be several reasons, like slow underwriting time, not having all needed documents etc.

  • #410223


    Loan processor works for a mortgage broker. They send in items to the lender to get the loan approved and cleared to close.

    An underwriter evaluates the items sent in by the loan processor and decides if the borrowers are qualified for the loan. They add conditions to the file, which the loan processor must satisfy.

    Reasons to change a closing date:
    1. Scheduling conflict with the closing attorney or closing company
    2. Sellers and/or buyers can’t make it
    3. Loan processor sends in items which require the underwriting decision to be re-evaluated
    4. Closing company screws up the closing the first time, and borrowers have to come in a do it all over again
    5. Sooo many others…

  • #410224


    The loan processor is the one that collects the documentation. The underwriter (me) approves, counter offers or declines the loan. They make the loan decision and adds tons of conditions (ask any loan officer).
    Any new or unexpected documentation can change a closing date due to delay.

  • #410225


    The loan officer is the person who helped you fill out your loan application. She gets paid the big money. It is her job to make sure that your loan is being moved along quickly. THe processor is the one who sits in back and makes $ 28,000 a year. She sends out your employment verifications and gets the phone updates on your loan. She is the “worker bee”.
    In the old days, banks had loan committees of 5 people who met to approve all loans. Now it is just one person. We call her the underwriter. She looks at your loan and makes the final decision. YES or NO.
    A closing date gets delayed when you loan has been rejected by the underwriter but no one is honest enuf to tell you. They never tell the truth. If it gets delayed for more than 2 days, move your loan to a different company. Pay the seller some money to buy an extension./

  • #410226


    RM’s answer is the closest to being correct, except for the fact that mortgage processors only work for mortgage brokers.

    Mortgage underwriters DO NOT work for brokers at all…b/c the broker never approves loans, they SHOP loans with other lenders for funding and THEIR underwriters approve the loans.

    Places like Countrywide, Bank of America, these are direct lending banks…they are not brokers, so they also employ both mortgage processors as well as mortgage underwriters.

    A processor is usually your second contact other than the loan officer. Most companies will not permit you to speak to the underwriter, though this is rapidly changing.

  • #198605


    The car loan has an APR of 2.9% for 5yrs. The mortgage is a 30 year fixed at 4.25%. I only plan to own the house for another 2 years or less.
    The car loan has an APR of 2.9% for 5yrs. The mortgage is a 30 year fixed at 4.25%. I only plan to own the house for another 2 years or less.

    I know as a rule of thumb it’s best to pay down the loan with the highest interest rate. However, the case of paying off a mortgage vs. a car loan can be tricky. The interest paid on the mortgage is tax deducatible. And if I’m not planning on living in the house for the next 30+ years, is it risky to put so much cash into it?
    Why I plan to move in 2 yrs or less – My husband bought the 2bd 2bth condo we live in 5 years ago (w/no down payment), before we met. When we got engaged I moved into the condo with him. Now we are expecting our first baby in 3 months and are quickly out growing the condo. The falling housing market was another concern of mine when considering to put more money on the pricipal…we may never see that money again as there is no equity in the house. We just paid off the loan on one of our cars and now we are trying to decide how to re-invest the old car payment to effectivily continue to pay down our other debts.

  • #256339


    pay both the loans together with in UR capasity

  • #256354


    The mortgage is costing you more percentage wise, but will your mortgage provider let you pay down more than agreed? If so, that is the way to go.

  • #256596


    pay off the car, then you can drop all the extra insurance you are forced to carry when there is a lien.

    the effective cost of your home loan may well be less tha the car, ‘cuz the interest is deductible.
    interest on your car loan is almost certainly NOT deductible.

  • #256607


    you might be lucky to break even on your house unless you put a hug down payment on it and bought it at least 10 yrs ago – house prices are still going down in some areas and whatever you sell it for , you will lose 6% for sales commission, plus some closing costs that the seller is required to pay – you might wind up not getting enough money to pay OFF the mortgage – any particular reason why you are already planning to move in 2 yrs? – you most likely won’t have any more equity than you do now to move up to a bigger house.

  • #256685


    It is always better to make larger payments to the highest interest rate first. It will cost you less money over time.

  • #257390


    pay off the car. Then take what you were paying on the car and add that as a principal payment every month on the home thus you lower the effective rate on the home as well and build more equity.

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