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Established Member
TnTNYC
Posts: 33
Registered: ‎11-17-2012
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Do we qualify? And, effect of new car loan on our app?

Am pretty confident I will qualify for a mortgage at good terms, but this is my wife's and my first home purchase, so are gauging against your experience.

 

I wonder whether her never having an auto loan in her name drags my wife's scores down (she is ~680)?  I had one in my name that began in 2005 and has been paid off for nearly 3 years.  I believe we can afford a new car (I really want a new car) but am concerned what a new payment will do to our application this summer?  See below for details, and thanks in advance!

 

  1. Credit:  Scores are up-to-date and in my signature.  No collections or late payments on current credit reports.  Never any bankruptcies, judgments, liens, etc.  My wife's credit score is less clean with scores in the 680 range due to some late payment history.
  2. Income & Source:  I am working, she is not.  My current income is ~$100,000 on W2.  Have been employed with the same company now for 2 3/4 years.  Was unemployed for 6 months prior, and employed prior to that for about 3 years after graduating university.
  3. Monthly debt payments:  Our rent is $1,475, which is pretty fair.  The minimum payment on our student loans comes to ~$475, but we pay more to get ahead of them.  No car loan payment currently.  We have a few credit cards, with a total limit close to $35,000 and a balance that will be paid in full next month.  DTI ratio is good at around 23% currently.  We can thank the 2008 financial crisis for scaring us straight and forcing us to live well within our means!
  4. Assets/Reserves:  We are starting to save cash now and have $10,000 in savings.  Otherwise, our 401(k)'s combine to about $100K.  Goal is to save $20-$25K by September and combine with a dollar-for-dollar matching gift from family (total of $40-$50K down).
  5. Location:  Norwalk, CT or New Haven, CT.
  6. Property:  Looking for a single-family home.
  7. Value:  Would like to not spend more than $350,000 unless the right place speaks to us.
  8. Occupancy & Transaction:  First home purchase!

Cheers!

 

TnTNYC


Starting Score: 707 (Experian); 702 (Equifax); 740 (TransUnion)
Current Score: 776 (Experian); 753 (Equifax); 780 (TransUnion) as of 09/11/2014
Goal Score: 800


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New Contributor
slappymancuso
Posts: 167
Registered: ‎12-04-2012
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Re: Do we qualify? And, effect of new car loan on our app?

If the new car payment is added to several other regular monthly payments (including student loans, credit cards with balances, tax payment plans or anything else) then it might make it more dififcult for you to get the amount of house you want.  Your DTI isn't bad right now, and I think you're including your rent in that.  The lender will not.  That said, if you plan to have the credit cards all paid off and aren't looking at a huge monthly car payment, you would probably be OK.  Your yearly income might not manage to stretch all the way to 350,000 by itself though, and the car payment will eat into an acceptable monthly payment which effecitvely lowers the amount of house you can afford.

 

As to whether or not just opening a new car loan will affect your approval?  Probably not.  It is going to depend on your lender, but there is no harm in reaching out and asking given your situation.  If you work with a broker, I would be extremely surprised if they couldn't find a way to make the situation work.

Established Member
TnTNYC
Posts: 33
Registered: ‎11-17-2012
0

Re: Do we qualify? And, effect of new car loan on our app?

Thanks for the quick input!  To clarify, the home value/budget we're working on would be ~$350,000, so a mortgage of $300-$310K given the down payment.  Believe this would be reasonable with $100K income.  We are excited to speak with loan officers about our plans, but I can't help but feel her lack of employment will cause concern.


Starting Score: 707 (Experian); 702 (Equifax); 740 (TransUnion)
Current Score: 776 (Experian); 753 (Equifax); 780 (TransUnion) as of 09/11/2014
Goal Score: 800


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Valued Contributor
JM-AM
Posts: 3,302
Registered: ‎06-09-2010
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Re: Do we qualify? And, effect of new car loan on our app?

You can apply alone. Honestly really is no reason to have both parties on the mortgage note. She just has to be on the Deed for ownership. You would be responsible for the debt if you applied alone. Unless you need her on the loan for income.

Purchasing a car which is an installment loan will not do too much for her score. Depending on price of car I dont see much issue with your DTI either.

If your scores are in the 700's you would also qualify for a better rate if going conventional. Any other type of government insured loan you would be fine even with her on it for best rates available.

You could start shopping homes now, just have to decide if you want her on the application (if need her income then you do), then apply. I can see you closing in 20 days or less once you start the ball rolling.
Good Luck
May all your dreams and wishes become a reality!
New Contributor
slappymancuso
Posts: 167
Registered: ‎12-04-2012
0

Re: Do we qualify? And, effect of new car loan on our app?

Yeah, you are right about the amount.  I was half asleep when I wrote that.  Not sure how I figured your income being lackluster for a 300-350k loan.

 

As JM-AM said, there's no harm in not having your wife on the loan.  With no income, there's really no reason to.

 

Happy shopping!

Established Member
TnTNYC
Posts: 33
Registered: ‎11-17-2012
0

Re: Do we qualify? And, effect of new car loan on our app?

In leaving her off the loan, I imagine I would be doing her credit score a disservice by not having a mortgage on her credit report (that is, one which is paid on time).  Is that true?  Is this common?  Hopefully she wouldn't feel a lack of ownership in not being named to the note, but I've considered discussing the prospect with her as we get closer to shopping time.

 

Still would feel more comfortable if we had more cash savings than $20K (including gift match).


Starting Score: 707 (Experian); 702 (Equifax); 740 (TransUnion)
Current Score: 776 (Experian); 753 (Equifax); 780 (TransUnion) as of 09/11/2014
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Valued Contributor
JM-AM
Posts: 3,302
Registered: ‎06-09-2010
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Re: Do we qualify? And, effect of new car loan on our app?

Credit scores arent everything. Besides there are plenty of ways to boost her credit down the road.

Truthfully its becoming more common. Reasons being if for some reason you are foreclosed on or go BK, then it doesnt take am impact on her. Those are just a few reasons.

Her name on the Deed is where home ownership comes from. You can both be on the mortgage payment but that doesnt give you home ownership. They usually ask you what or who you would like on the Deed.

While we paid for our homes we never put ourselves on the Deed. All our homes are in our Kids names on the Deed. So technically we own nothing. Good thing we have good kids that depend on mom and dad! Lol
Good Luck
May all your dreams and wishes become a reality!
New Contributor
slappymancuso
Posts: 167
Registered: ‎12-04-2012
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Re: Do we qualify? And, effect of new car loan on our app?

That part is kind of true.  Her credit would get a boost from having a mortgage which is paid on time. 

 

I believe she can be listed on the loan.  The fact that she isn't contributing to the household income won't really count against you, but it sounds like your scores are probably a tier above hers.  This would likely result in significantly worse terms for the loan, as the lender would use the lower of your scores to determine those terms.

Valued Contributor
JM-AM
Posts: 3,302
Registered: ‎06-09-2010
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Re: Do we qualify? And, effect of new car loan on our app?

Only if going Conventional will it play a big part in rates. Her scores on government program would still qualify for best rates.
Good Luck
May all your dreams and wishes become a reality!
Established Member
TnTNYC
Posts: 33
Registered: ‎11-17-2012
0

Re: Do we qualify? And, effect of new car loan on our app?


JM-AM wrote:
Credit scores arent everything. Besides there are plenty of ways to boost her credit down the road.

Agree, and great point.

 


JM-AM wrote:
While we paid for our homes we never put ourselves on the Deed. All our homes are in our Kids names on the Deed. So technically we own nothing. Good thing we have good kids that depend on mom and dad! Lol

Lucky kids!  Never thought of doing such a thing, so will keep that in my pocket for down the road when we have some of our own.


Starting Score: 707 (Experian); 702 (Equifax); 740 (TransUnion)
Current Score: 776 (Experian); 753 (Equifax); 780 (TransUnion) as of 09/11/2014
Goal Score: 800


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