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Valued Contributor
Shellie
Posts: 1,223
Registered: ‎05-15-2013

Loan options...what's your 2 cents

I can use my current bank and get the same 7.5% rate I currently have or try one of the other avenues and get a better rate.

 

DCU can give me 1.24% if my score is 675+ or 4 something if it's not. 

 

We still want to buy a house late this year-early next year.  I am thinking that if I add a car loan that my DTI will be way out of balance and drop my scores.  My current bank does not report do the car loan doesn't show up on my reports.

 

I earn about $25k from job and $11k from other sources.  The car I'm looking at is $21k.

 

Any input is appreciated.

myFICO EQ Starting Score 568 05/01/2013 Current Score 657



Established Contributor
SamsungHDTV
Posts: 517
Registered: ‎10-25-2011

Re: Loan options...what's your 2 cents


Shellie wrote:

I can use my current bank and get the same 7.5% rate I currently have or try one of the other avenues and get a better rate.

 

DCU can give me 1.24% if my score is 675+ or 4 something if it's not. 

 

We still want to buy a house late this year-early next year.  I am thinking that if I add a car loan that my DTI will be way out of balance and drop my scores.  My current bank does not report do the car loan doesn't show up on my reports.

 

I earn about $25k from job and $11k from other sources.  The car I'm looking at is $21k.

 

Any input is appreciated.


"We" want to buy a house, as in we will be able to include your spouse's income?

 

If we only consider you're income $36K for the scenario, then what I would do if I were you:

 

1. Finance with your bank so it doesn't mess with your DTI

2. Buy the house when you are ready

3. Refinance with DCU after you close on the house

 

But here's the thing, make sure you can afford the payments. There are DTI restrictions to save you from yourself. 

I'm a personal banker and do a lot of auto loans serving the Houston area.
I suggest first time car buyers to read the sticky guide in the auto loan section.
I try to check these forums often, but if I missed your post, please feel free to message me with a link to it.
Established Contributor
SamsungHDTV
Posts: 517
Registered: ‎10-25-2011

Re: Loan options...what's your 2 cents

One last thing to consider in my suggestion, I don't know how the new mortgage payment will affect the auto refinance. So you would need to refinance before the mortgage shows up on the credit reports.

I'm a personal banker and do a lot of auto loans serving the Houston area.
I suggest first time car buyers to read the sticky guide in the auto loan section.
I try to check these forums often, but if I missed your post, please feel free to message me with a link to it.
Valued Contributor
Shellie
Posts: 1,223
Registered: ‎05-15-2013

Re: Loan options...what's your 2 cents

Car will be only me. House may or not include spouse on loan. But he will financially contribute.
myFICO EQ Starting Score 568 05/01/2013 Current Score 657



Valued Contributor
Shellie
Posts: 1,223
Registered: ‎05-15-2013

Re: Loan options...what's your 2 cents

I've been thinking about doing exactly what you suggested actually.
myFICO EQ Starting Score 568 05/01/2013 Current Score 657



Established Contributor
SamsungHDTV
Posts: 517
Registered: ‎10-25-2011

Re: Loan options...what's your 2 cents


Shellie wrote:
Car will be only me. House may or not include spouse on loan. But he will financially contribute.

If he will contribute, what does him being on the mortgage depend on?

 

Why not put the car in both names?

 

If he is on the mortgage, what's his income? Maybe DTI wont be a factor because of  his income.

I'm a personal banker and do a lot of auto loans serving the Houston area.
I suggest first time car buyers to read the sticky guide in the auto loan section.
I try to check these forums often, but if I missed your post, please feel free to message me with a link to it.
Valued Contributor
Remember0
Posts: 1,265
Registered: ‎02-12-2014

Re: Loan options...what's your 2 cents

Wait, I'm missing something. How does a loan with the current CU not affect DTI but a loan with DCU for a lower rate would affect DTI? I'm not sure I follow...

 

Based on the OP's prior thread, I guess the ideal advice won't be too helpful: buy the home first, and then after closing, buy the car.

 

In OP's case, there's at least six months + before the start of next year so the mortgage people won't see a really new account/INQs, and that's good.

 

Though I am still unsure how going with the current CU doesn't cause a bigger hit to DTI than going with DCU? Also OP, how much house do you want to buy and how much of a down payment do you have? Given your income (even without the car loan being considered), you may need someone else to be on the loan if you want to buy a home that's decent (well at least around where I live).

Valued Contributor
lg8302ch
Posts: 2,481
Registered: ‎11-13-2012

Re: Loan options...what's your 2 cents

[ Edited ]

Am I the only one that thinks a 21K car  is too high for a 36K income?  I would not buy the car if it was me and look for a cheaper car...sorry  I know that is not what you wanted to hear :smileysad:

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Senior Contributor
StartingOver10
Posts: 3,829
Registered: ‎03-06-2010

Re: Loan options...what's your 2 cents


Shellie wrote:

I can use my current bank and get the same 7.5% rate I currently have or try one of the other avenues and get a better rate.

 

DCU can give me 1.24% if my score is 675+ or 4 something if it's not. 

 

We still want to buy a house late this year-early next year.  I am thinking that if I add a car loan that my DTI will be way out of balance and drop my scores.  My current bank does not report do the car loan doesn't show up on my reports.

 

I earn about $25k from job and $11k from other sources.  The car I'm looking at is $21k.

 

Any input is appreciated.


Shellie,

It doesn't matter if your auto loan reports to your credit reports or not - when you apply for the mortgage you must show the debt on your mortgage application. If you don't show all of your debt that exists at the time you apply for a mortgage it is mortgage fraud.

 

The only way to not show the new car loan is to not have a new car loan.

 

If you are going to get a new loan now, then get one that is affordable for you and for your future DTI when you apply for a new home .

Valued Contributor
Shellie
Posts: 1,223
Registered: ‎05-15-2013

Re: Loan options...what's your 2 cents

My current car loan is with my personal bank not a CU.  The bank doesn't report. 

 

As far as too much car for my income, yes it would be if that were all my income.  We have a 2 income household and he makes close to $100k a year.  So it's not too much car.

 

His credit is horrible!  We hadn't started the repair process on his yet.  Most of his stuff is nearing fall off dates anyways.  All his is medical from a car accident in 2007. 

 

I hadn't planned on buying a car any time soon.  However, some one pulled out in front of me last week and totaled mine.  So now I have to get a new car.

 

The house is unbelievable.  It belongs to my brother in law and we are currently living in it.  I needs cosmetic repair and remodel but its a great house.  $25k is what we will be paying for the house.  We are renting it now.

 

If I were on my income alone I would never buy more than I can afford.  The car that got totalled is the only car I've ever had a payment on since 2006.  Prior to that I paid cash for a vehicle, like at tax time.  My Flex was only a $13k loan for 4 years.

 

The car I'm looking at is a 2014 Ford Taurus Limited with 13K miles on it. 

 

Original plan was to buy the house first and think about a another car in 12-18 mo.  Plans changed, out of my control.  Yes I could go get a $10k car but in all honestly I don't want to.  Like I said if it was only my income I would never buy more than I could afford.  Current car payment is $350 so I plan to stick to that.

 

Ok, I think I covered everything.

myFICO EQ Starting Score 568 05/01/2013 Current Score 657




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