Is it best to pay off our car loan before

[mrst2]

we buy a new house?  We took out a 3 yr loan on our minivan in 2011 so we have about 1 year left on it.  The loan is somewhere around 8k which we can cover if we take some money out of our savings account.  Would it be better to pay off the loan before we start house hunting/applying for a home loan?  

[jgb]

Assuming your debt to income ratio is fine, I think it's better to have more cash/liquid assets as you go into a home buying process. You may need that money for DP or renovations/upgrades.

[Deleted]

No. I would keep the cash reserves (assuming the interest rate on the car loan isn't exorbitant).

[mrst2]

Ok good to know. Thank you. Loan is at 2.49%.

[jgb]

Jan 23, 2013 18:27:02 GMT -5 mrst2 said:

Ok good to know. Thank you. Loan is at 2.49%.

No way!  Keep the loan and keep the savings.  

[phunluvin82]

What is the interest rate? Unless it's for some reason really high, I probably wouldn't pay it off. If I were about to buy a home, I'd rather have the money in savings for any/all costs that will come up with buying, closing, moving, rennovating, furnishing, etc.

I don't think credit score-wise that it would be hurting you...although I guess that's tough to say for sure without knowing your whole credit picture.

ETA: yeah, at 2.49, I'd leave it be.

[Deleted]

Do not pay off the car any faster than you have to, at that rate!

[mrst2]

I thought maybe it would look better if we didn't have any debt, but if it's not an issue then I'll leave it be.

[curbsideprophet]

I would put the money towards a downpayment, closing costs, etc. the rate is low enough I would feel rushed to pay it off.