Question by ricko: I am refinancing my mortgage at a lower rate and am considering a new car purchase. Is this wise to do?
I dont have any other major loans or home renovations to do but I am in the market for a new car and would rather avoid financing a new car. I do have an equity loc(variable rate) thats open if i ever need in an emergency but I think it might be better just to go through refinancing. Any opinions?
Best answer:
Answer by steinerrecliner
up
What do you think? Answer below!
refi, buy don’t take money for the car. Doing that finances the car for a much longer period than if you finance the car itself. Also, it might be a point that you would want to dump the car ?
I agree cash is king for purchasing and making the best use of money, but not with long term financing. Lower the house payment to as low as you can on a fixed rate and keep the equity in the house. During downturns, there will still be equity and borrowing power. Get underwater and all your options are lost.
Not having a car payment is always nice.
Another thing to consider is that you can write off mortgage interest but not car loan interest. So you’d be better to have more loan on your house and less loan on your car, if you see what I mean.
Bandit makes a good point, though. Equity in your home gives you power, so you want to be careful not to remove too much of that equity.
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