Main question - Will a new installment loan for a car hurt my chances of a mortgage approval if it is within 5 months of applying for a mortgage.
We would like to buy a home in June or July. We'd like to get a loan for at least $190,000. The loan will probably be in my name only because my credit scores are in the mid 700's and his are in the low 600's. My monthly debt includes two student loans ($125 each) and a car lease payment ($273). My DTI ratio is too high right now to get approved for $190,000. However, if I can lower my monthly debt to $400 or less, I can get approved for this amount. In June we should have at least the following in savings - Me: $15,000 and Him:$13,000.
My car lease is up May 17th. Obviously I realize that this is NOT an ideal situation. I absolutely would not get a new car loan in May! The residual value I will owe at the end of the lease is $11,300. KBB says the PPV for my car is about $12,500. He currently does not have a vehicle (walks to one job and carpools to the other) and will also need to buy one (cash) before we move.
We're going to meet with a mortgage councelor in the next two weeks, but I thought I'd ask for some advice here as well.
Which of these options do you think would be the best? Option 2 would obviouly be what we'd prefer to do.
1. Use his savings to pay off my car and purchase him one. Use my savings towards downpayment and closing cost
2. Get a loan through my bank for my car. I'd put approx. $4,000 down (from his savings) and the monthly payment would go down to $140. Use my money towards downpayment and closing cost.
