Ask Terry Questions Include car payment into mortgage?

Include car payment into mortgage?

By Terry Savage on March 27, 2016 | Housing / Real Estate

Hi Terry I was caught in the housing market crash of 2008 & had to file bankruptcy to save my home & was given a loan modif. Which has helped my int. Rate was at 2% until last year now at 3% & wil finish at 4% Aug.2016 I have always had good credit & am on the road to having it once again but I need to buy a new car (20 yrs old car) would it make sense to refinance my home & include the new car payment?

Terry Says:   I can understand your problem.   But the math might not work out for you, so you have to figure out the following:

  1.  Could you qualify for a new mortgage based on your credit history — and what would the new rate —  and new monthly payment — be if you can refi?
  2. If you don’t refi, but do buy a used car, what would the monthly payment be — and for how long?

Now you can compare.  If you refi, you will likely extend your mortgage for many more years, paying much more interest along the way.  Currently, I assume you’re locked in at no higher than 4 percent for your current mortgage.  You don’t want to put your home in jeopardy again!   And doing so for a car — a depreciating asset — really doesn’t make sense.

I have one other potential solution for you.  Consider LEASING a car.  You don’t build any equity ownership, and when the lease is up all you have is receipts for the monthly payments.  But a lease costs far less on a monthly basis than a car payment — because you are only “buying” 3 or 4 years of “use” of the car.  That might solve your problem for transportation.  And who knows, you might have saved up some money in the next four years during the lease to be able to buy a car then!



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