Auto loan and mortgage loan

gsx60trim · ‎06-03-2015

So I'm looking to purchase a new vehicle, however at the same time I'm currently trying to continuously raise my credit scores for a mortage loan. I was pre approved once last year for $200,000, but didn't fully understand the other costs associated with closing on a home (down payment, closing costs). Costs to which I do not have yet. Scores are 659, 648, 639. I haven't really given myself a definite date to really start hunkering down on the mortgage process as I'm just begining to save for a down payment on a home. I don't really know what that number is yet. Realistically, I don't see me truly delving into the mortgage process for another 2 years. Being that i'm looking into opening an auto loan, will this have any adverse effects with my not so distant goal of owning my first house within the next 2 years?

gsx60trim · ‎06-03-2015

One thing i forgot to mention is captial one has been sending me e-mails stating I am approved for various dealerships within the greater phoenix area for up to $35000. I too hold a captial one platinum cc with them, so this may be the main reason I see these e-mails frequently.

Anonymous · ‎06-03-2015

@gsx60trim wrote:
So I'm looking to purchase a new vehicle, however at the same time I'm currently trying to continuously raise my credit scores for a mortage loan. I was pre approved once last year for $200,000, but didn't fully understand the other costs associated with closing on a home (down payment, closing costs). Costs to which I do not have yet. Scores are 659, 648, 639. I haven't really given myself a definite date to really start hunkering down on the mortgage process as I'm just begining to save for a down payment on a home. I don't really know what that number is yet. Realistically, I don't see me truly delving into the mortgage process for another 2 years. Being that i'm looking into opening an auto loan, will this have any adverse effects with my not so distant goal of owning my first house within the next 2 years?

There's a lot of variables missing here. Re-evaluate for yourself: Income? Expenses? Average cost of homes in your area? Do you currently have a car now? Did you finance it? Are you renting right now? Do you like living where you are?

Here's a scenario: You finance a new car and make all payments on time.

The Good:

- You have an installment loan on your credit report in good standing (assuming this is your only installment reported - diversifies your credit mix) - FICO score increases

- Higher FICO = presumably lower APR on your mortgage

- You have a new car

The Bad:

- You have a giant auto loan expense every month (especially if you take the full $35k loan)

- It's going to take much longer to achieve a 20% downpayment - less if you don't mind or love paying extra fees for insurance

- DTI may hinder a mortgage loan approval

- Stuck at current residence for x years

I would re-evaluate my budget and plan. Figure out what kind of home you would like to live in, take the average cost of those homes and figure out what the 20% downpayment would be. Set that as a goal - estimated, but a goal none-the-less. Determine how long it would take to reach that goal with and without financing a new car (consider buying used if a car is mandatory). Depending on how long it would take you to reach your goal, ask yourself: Should I focus on purchasing the home first, or am I okay with buying the car first?

Everyone's situation varies. What are you okay with?

gsx60trim · ‎06-03-2015

Great points. I currently rent, same residence fo the last 3 1/2 years. I currently own both my vehicles, one is a 99 and the other an 08. Although my 99 is maintained, it is showing definite signs of wear. Replacing the 99 is becoming more of a need than a want, especially with it being the primary mode of transportaion for the entire family. DTI i haven't really calculated. Income, 45k yr. Capital one cc limit $1300, utilization $56. Credit one bank cc limit $600, utilization $375. Rent $811. Aaron rents, $700 bed fram paid $350. All in all not much debt IMO.

Horse property in my price range runs 150k-200k, so $15000 - $20000 I'd have to save. Seem like an enternity of saving. Definitely many variables in my situation, thanks for the advice.