How do car loans work? An answer by Cliffco Mortgage Bankers, Long Island, NY

Cliffco Mortgage Bankers, Long Island, NY - Phone: 516-350-5355

You want to purchase a new car, and you wonder how the financials will work out when you also seek to purchase a home. Here is an answer by Cliffco Mortgage Bankers, Long Island, NY.

There are 2 different types of car loans: installment and lease. The installment loan is a close-ended fixed rate loan, with a pre-determined number of payments. Typically 5-7 years. Once the installment loan is paid the buyer owns the car outright and has no further obligation.

For mortgage qualification purposes, an installment debt with less than 10 months remaining may be excluded from the debt ratio. In some situations, it will be better to pay it off early to enhance your qualifying for a home loan.

Lease payments must be considered recurring debt... regardless of the number of payments remaining. That changes your debt-to-income ratio, and therefore it has an impact on your qualifying for a home loan.

The expiration of a lease typically leads to a new lease agreement.

Additional comment:

There are multiple aspects which determine the creditworthiness of a person for a mortgage loan. It is relatively rare that all aspects of a credit profile are picture perfect.

Our loan officers are here to advise you as to the best strategy to prepare your application for a mortgage loan. Should you pay off your car loan before applying? Do you need to get out of your car lease into a car loan? This is a personal conversation you have to have with your loan officer.

When you work with Cliffco Mortgage Bankers, you work one-on-one with a loan officer -- not some faceless person shielded behind a 1-800 number who will never have any relationship with you -- like in big banks. Cliffco Mortgage bankers is a fully delegated mortgage banking institution. That means we originate and fund 100% of our loans. We will never pass your loan off to a third party (contrary to most big banks), and all credit decisions and underwriting are done in-house by our highly-educated loan professionals.

Contact Cliffco Mortgage Bankers to prepare your mortgage loan application the right way for success: 516-408-7300

Cliffco Mortgage Bankers is fully licensed in New York, New Jersey, Pennsylvania, Connecticut, Florida, and Texas. Our home office is in Uniondale, Long Island, NY. We cover all towns and hamlets of Long Island, as well other neighborhoods in NYC.

Have a Question? Start a Conversation With Our Expert:

 






            
        
        
        




    
        
            10%
            
                
                
            
        
        
        
            
                Thank you for reaching out to us. A member of our team will reach out to you shortly.
                
            
        
                                    
                                        
                                                
                            
                                
                                                                                            
                                                                
                                                                                                                
                                                                                            First Name
                                                                                                                                    
                                                
                                            

                                            

                                        
                                    
                                
                                

                                                                    
                                

                                
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
                                                                
                                                                                                                
                                                                                            Last Name
                                                                                                                                    
                                                
                                            

                                            

                                        
                                    
                                
                                

                                                                    
                                

                                
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
                                                                
                                                                        
                                
                                

                                                                    
                                

                                
                                                                                                                                                                                                        
                                                                                Email
                                                                                                                        
                                            
                                        
                                        

                                    
                                                                                                                                                                                                                                                                                                                                                                                                                            
                                                                
                                                                        
                                
                                

                                                                    
                                

                                
                                                                                                                                                                                                                                        
                                                                                Phone Number
                                                                                                                        
                                            
                                        
                                        

                                    
                                                                                                                                                                                                                                                                                                                                                                                                                                                                
                                                                
                                                                        
                                
                                

                                                                
                                                                        Questions?
                                                                                                            
                                        
                                    
                                    

                                
                                                                    
                                

                                
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
                                                                                                
                                        
                                            

                                        
                                    
                                                                
                                                        
                                                                                                                                
                                                                                                            
                                                                                                                                
                            
                        

                    
                


                            
        
            * Required Field