topic Re: Mortgage and new car loan, should I do it? in Mortgage Loans

Mortgage and new car loan, should I do it?

mwmiller82 — Sat, 06 Oct 2012 15:33:13 GMT

Ok, hello all, a quick question to see if I should apply for a used car loan by trading in my current car.

I wanted to know something, I will be applying for a home in January (because that will be my 12th month of all on time payments in which all these lenders are telling me I need in order to get approved for a loan) I have a 9% debt to income ratio, my only big debt is my high car note. 2 years ago I purchased a 2007 Acura but my credit score was so lowsey at the time I have an almost 18% interest rate on it. My Question is, would it be a good idea to get rid of this car, get a slightly newer one, get a much lower rate and monthly payment, then to hold on to it? My real concern is would this hurt me in January with a new car loan? I'm looking at it like this, a newer car, less hassle, lower payment, yet of course longer term. My scores increased about 100-120 points since I got that loan 2+ years ago.

Im figuring when it comes to debt to income rations they only go by what you are paying monthly and not what you are paying overall.

Any advice, Thanks!!

Re: Mortgage and new car loan, should I do it?

jf49rs — Sat, 06 Oct 2012 19:40:02 GMT

I would not app for any thing right especially for a car loan! Just wait until after u closed on your house first than u can trade your car! and good luck!

Re: Mortgage and new car loan, should I do it?

Elcid89 — Sat, 06 Oct 2012 19:41:53 GMT

It shouldn't hurt you as long as you are either trading or refinancing the current vehicle, as you'll still only have one auto loan. I just can't imagine that the terms are going to improve that much with 540 range credit. Do you have a commitment from an dealer / auto lender that substantiates the lower rate & payment, or are you just assuming that it'll happen?

Re: Mortgage and new car loan, should I do it?

TTR79 — Sat, 06 Oct 2012 20:14:00 GMT

If your DTI is that low, why worry with a refinance or trade at this point. I'd go mortgage first then attempt to trade or refinance your vehicle.... Just my 2 cents.

Re: Mortgage and new car loan, should I do it?

mwmiller82 — Sat, 06 Oct 2012 21:19:00 GMT

Elcid, my scores are all between 620-631 now, I haven't updated my fico tag yet.

Re: Mortgage and new car loan, should I do it?

Elcid89 — Sat, 06 Oct 2012 21:26:19 GMT

mwmiller82 wrote:
Elcid, my scores are all between 620-631 now, I haven't updated my fico tag yet.

Well then, I would pursue it IF you get a commitment from a dealer / lender to buy the paper at a significant enough savings to make it worth your time. If you are going to do this, and you hope to start pursuing a mortgage in January, I would do it now, ASAP, right away, so that the loans have time to settle out on your report & it won't look like you have 2 auto loans open.

Re: Mortgage and new car loan, should I do it?

JM-AM — Sun, 07 Oct 2012 16:37:56 GMT

In my opinion the lenders have tightened up once again. It may ony be temporary but I would not give them a reason to reject your loan. Applying for a major purchase such as an automobile can have a major impact on approval or disapproval. Most underwriters would prefer not to see any new credit with-in the last 12 months. There are exceptions depending on your credit worthiness and stability of income. But once again is it worth the risk?

Good Luck

Re: Mortgage and new car loan, should I do it?

Elcid89 — Sun, 07 Oct 2012 18:11:49 GMT

JM-AM wrote:
In my opinion the lenders have tightened up once again. It may ony be temporary but I would not give them a reason to reject your loan. Applying for a major purchase such as an automobile can have a major impact on approval or disapproval. Most underwriters would prefer not to see any new credit with-in the last 12 months. There are exceptions depending on your credit worthiness and stability of income. But once again is it worth the risk?

Good Luck

And I would agree, except that he isn't really assuming new debt. He's re-fi'ing existing, serviced debt on better terms.

Re: Mortgage and new car loan, should I do it?

StartingOver10 — Sun, 07 Oct 2012 19:54:55 GMT

^^^ Have to agree with the last statement. OP make sure to go to a CU so there is only one pull for the refi on your vehicle. Talk with them first to see what terms they can offer you. You will almost always do better with a refi thru a CU.

Re: Mortgage and new car loan, should I do it?

mwmiller82 — Sun, 07 Oct 2012 20:18:37 GMT

Thanks guys I'm going to give it a shot!!!!