Help with a decision? Possible new credit prior to preapproval.

[Lnkeller]

Just a few questions re: the situation we are in.

Currently we have the following debts:
Car Loan (Opened 2/14) 335 / mo
Car Loan (Opened 7/12) 469 / mo
Student Loans - 40,381 total - deferred. (I know that they will find out what my payment would be and will include that in our DTI unless I can prove 12mo deferment)
Discover Card (my name only) - $24 balance / 500 limit.
Capital One Card (his name only) - $54 / mo (paying more than the minimum. Current balance of 1700 / 2000. Will be continuing to rapidly pay this down over the next month)
Kays Card (joint) - $0 balance / $4200 limit

My score watch from here is at 604.
His is 583.
I just sent a GW letter to the only collections on my account - received confirmation that they would be deleted in 24-72 hours using E-Oscar(?), but this has not updated just yet. I have 5 collections on my account that will be removed, and he has 1 that will be removed.

I have found a Suburban that is being sold for $12,700. We have $2000 to put down on it, but I am expecting approx a 10% interest rate based on the information from the car loan obtained in February for my husband's vehicle.  We currently owe $20,000 left on our traverse, but will be getting only $14000 as trade in value on it, so the total amount we would be financing would be approx $16,000.  We need the larger vehicle, but more than that, the price is one that cannot be beat for the condition and the year that it is.  We were looking at possibly getting it this coming weekend. 

However, I am questioning if the reduction in our monthly payment by approx $150-200 / month and the assistance that would give our DTI ratio is worth the inquiry and the new TL even though it would technically be reducing our debt?  Or if I should just take the $2000 and pay off my husband's CC, then put the rest in savings. We are looking to apply for a loan in the next 1-3 months if our current home sells, and already have a property in mind.  I am hoping that getting these collections removed from our reports as well as continuing to pay down the util to an acceptable % will boost our scores the 40 points or so that I need and the 60 points or so that he needs, but I obviously do not want to hurt us further. 

We are looking at applying for a loan of approx $280,000 with $20,000 down payment.  Gross income is approx $95,000. Preferably a conventional loan - which I know needs a mid score of 640. We would be willing to do another FHA loan if completely necessary, but I would like to avoid the higher PMI if possible. 

Any advice?

[StartingOver10]

Would the new vehicle payment replace the payment that you have currently for $469/mth?

I notice you have $20k for down payment. Do you have other funds for closing costs and pre-paid expenses due at closing or is this your total available cash?

[Lnkeller]

Yes it would replace the $469. We have other funds available for closing costs above the $20,000.

[StartingOver10]

Since you are dropping the payment $150 to $200/mth - I would say go for it. You can always write a letter of explanation for the change in vehicles. If the payment isn't going to drop much than wait until you close on the new place.

EDIT:  Don't get your financing at the dealership they will make too many inquires. Even if the car dealer tells you there will only be one inq, it isn't true. The dealership shops your deal around and there are frequently many, many inqs.  Get your finacing for the vehicle at a CU so there is only one cr pull. When you go to the dealer make sure your reports are frozen to prevent multiple pulls. If at all possible wait until you close on the house before you app for a vehicle because the car dealership pulls can really tank your score.

[Lnkeller]

That fell through anyway... They sold the vehicle tonight.

So I paid down both credit cards with the $2000 that I was using for a down payment and I will have both paid down to under 9% by the time they report.

[StartingOver10]

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@Lnkeller wrote:
That fell through anyway... They sold the vehicle tonight.

So I paid down both credit cards with the $2000 that I was using for a down payment and I will have both paid down to under 9% by the time they report.

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That is good for you in the long run. Get a new vehicle after you close on your house.