HELP! Need some advice please...

[mompreneur1]

I have been on this forum for some time now taking in all that I possibly can in an effort to rebuild my credit along with DH's as well. Recently, the need for a second car has arisen and I am in need of a bit of advice...With plans of purchasing a home in the Summer of 2012, it is my upmost concern we don't accumlate any inquiries on our CRs. However, DH would like to purchase a used car no more than 6k max and place half down as a DP. My question is this, how will inquiries on DH CR for this purchase affect our chances of purchasing a home by our deadline? Should we avoid securing a loan at all cost? Can we still secure a mortgage loan with the inquiries?

I should also mention we also have an existing joint car loan--absoultely no lates that is scheduled to payoff in January 2012. Advice appreciated!

[kjm79]

First, I would start by saying that while the general rule of thumb is to NOT apply for or take on new debt within 12 months of app'ing for a mortgage...doing so will not automatically dq you.  A car for most people is a necessity to even earn a living, depending on where you live.  Now if you went out and opend 10 credit cards in the last year, as a lender I'd frown upon that.  Inquiries are just a little overrated IMO/E. 

Second, if you are looking at a used car for $6K max, you may not find financing anyways.  Many lenders won't finance a used vehicle over x amount of miles or more than x years old.  Most also have minimum lending requirements and with your $3k down, the remaining $3k might not meet those requirements.  I would think you might have to do a personal loan. 

[llecs]

I wouldn't get a car loan before the mortgage. The inquiries likely won't be an issue if done now, but the new loan could likely result in a score ding, some of which won't clear up before next summer (depends when in the summer I guess). Score damage could be felt up to a year if this new car loan reports. Aside from FICO, your DTI could take a hit, even assuming you PIF your other loan in January and if the new car loan exceeds the old with regards to monthly payments. If I was in the same situation, I would wait on the car or pay cash for it, or buy a clunker to get me to the mortgage. After closing on the mortgage, then I'd consider a car note then.

[mompreneur1]

Thanks for the great information, guys!

I will try and talk DH out of financing half of the loan and into getting a "clunker" for the time being as it appears it WOULD be better to wait until after we purchase a home. We'll see how it goes (deep breath)....