Auto Loan./ Mortgage Question

[Anonymous]

Hi everyone,

Here's my dilemna- not sure which place this belongs. I am less than a month away from getting a mortgage on a house we are buying from a family member. I have already been pre-approved for the mortgage, however that approval has expired and we will be getting a new approval when we actually get the mortgage.

Yesterday our car with over 200,000 miles on it finally died. My questions are:

1. Does it make better sense to get car loan now and hold off on mortgage for another month or two? If so, what effect does getting a car loan have on your credit. I haven't had a car loan on my credit for over 10 years. 

2. Get mortgage now and get car loan after? If so, what effect does having a new mortgage on your credit have? If we went for this option, we would likely rent a car for the next 30 days costing us about $1,000.

My scores are TU: 735, Equifax 714, Experian 690.  Nothing bad... one or two late payments around 7 years ago. 

Debt to income is pretty low right now. (Although not sure what is included in debt to income ratio that the mortgage broker used. I have actual debt payments of $300 (this includes student loan payment).) She had to have considered somthing else though, because that doesn't come close to the 32% she dti she indicated I had. Do they include rent in this figure?) 

Car I am thinking of getting is about $24,000. I have money saved, but that was for down payment on house. 

Anyone have any thoughts or suggestions? 

[Remember0]

The golden rule about mortgages is no new credit less than six months before mortgage. If you want a mortgage in the next six months, I would not go near a dealership.

Definitely close on the mortgage first, otherwise a recent loan can cause problems with underwriting.

With those FICOs I wouldn't worry too much about the auto loan. If anything mortgage underwriting is A LOT stricter than auto. If you qualify and close on your mortgage in lets say a month or two, then you should have no problems qualifying for a low rate 25k auto loan after closing. Heck you can buy the car after closing but before the mortgage ever reports to your credit and counts against DTI.

BTW 1k to rent a car for a month sounds a little high. Is it like a regular compact/midsize car? Using my USAA AWD code all-in at Avis, I'm seeing $675 for a compact. Try going through Costco and renting at a off-airport location and see what you can do. I think you should be able to get under $700 to be honest if you rent off airport (airport locations have high fees typically).

[StartingOver10]

To answer your question about the DTI for the mortgage, the lender uses the new mortgage payment that you are qualifying for plus your cc and installment loan debt for your total DTI.  The new mortgage payment is:  principal, interest, real estate taxes (1/12), homeowners insurance (1/12), HOA/condo fee (if applicable), mortgage insurance (if applicable).

Definately shop for a vehicle after you close on the new house, not before.