topic Re: USDA Preapproval and Car Question from New User in Mortgage Loans

USDA Preapproval and Car Question from New User

Anonymous — Mon, 14 Jun 2010 01:30:23 GMT

Hi..I am new to the forum so hope i am doing this right. My husband and I would like to put in a loan app January of 2011 to purchase a home. Right now my score is 595 (exp) and his is 582(exp). we have paid our cc down below 50% and had a few deletions but they haven't been updated yet as many were paid the first week of june. Also, 2 tax liens that State of MD has agreed to vacate once I pay - one poasted 12/09, the other 4/2010). One CA for my husband (comcast - yikes) that we hope will be a pfd 9/2009. Income is $93k and once debts are as follow

AmerGener Installment Loan 2600

Car Loan 5500

Dell Account 1725 out of $2500 limit

HSBC $68 of 300 limit

Target $93 of 200 limit

So my question is...we really need another vehicle...if we buy a vehicle next month (july) will this cause us not to get a home loan in Jan...we are looking to get a used one and spend no more than $17k...Also, how soon do you think we can get the addt'l 40 to 50 pts needed to qualify...and will having the liens vacated improve that score....

One more thing..sorry..does USDA have new funds yet...

Thanks FALU...

Re: USDA Preapproval and Car Question from New User

llecs — Mon, 14 Jun 2010 02:42:22 GMT

I'm no mortgage guru, but I'd hold off on the car loan until after you move. The new credit will hurt your FICO scores for the next 6-12 months and could negatively impact your AAoA and that'll compound the ding. Also, and not related to FICO scoring, your DTI would increase and that could hamper your new home search if monthly obligations vs. your income would be an issue come then.

If you really need a car, I suggest a clunker for the interim.

Re: USDA Preapproval and Car Question from New User

Anonymous — Mon, 14 Jun 2010 13:04:48 GMT

Thank you for your response...what is AAOA? Wow, it will impact the score for 6 to 12 months....?

Re: USDA Preapproval and Car Question from New User

llecs — Mon, 14 Jun 2010 15:45:25 GMT

@Anonymous wrote:

Thank you for your response...what is AAOA? Wow, it will impact the score for 6 to 12 months....?

AAoA = Average Age of Accounts. FICO puts some weight behind this and is the average age of all of your OC accounts (e.g. car loans, student loans, CCs, mortgage, etc.). Any new credit would cut into that and ding your score a little extra.

Four things can ding your FICO score when adding a new car loan:

1) Inquiry

2) New Credit

3) Drop in AAoA, if applicable.

4) Rebucketing, if applicable.

Re: USDA Preapproval and Car Question from New User

ShanetheMortgageMan — Wed, 16 Jun 2010 16:50:55 GMT

I'd concentrate on improving your scores right now, and as llecs has pointed out, adding a car loan at this time would potentially lower your scores for awhile. If you need a car for work, then you really need a car, and while owning a home may be delayed for a bit, being employed will help you afford the mortgage that you aim to qualify for next year.

You'd need to list what your payments are, where you are buying, and what sales price range in order to say if the new car payment itself would negatively impact the amount you are looking to qualify for.