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Welcome to the board. This is a very tricky situation albeit a simple one. It comes down to which is more important to you. Is it the mortgage or the car? The reason being, if you really want to go for the mortgage, you don't want anything new reporting thus debt, inquiry etc...
An option for the car could be have a family member have it in their name and once you get the mortgage you can just buy it from them thus, if the car is a must have for you.
If you get pre-approved you run the risk of surprises down the road when you close after you buy the car. Better to buy the car now then you know what you are dealing with. You don't want to make any changes after the pre-approval and your two month window is very small to find a house and get a mortgage done.
If you're currently borderline with your score then I wouldn't want to risk it with the HP and the new account. However if your score is solid and you're trying to prequilfy for a higher amount then you can buy the car to show the lower payment which will lower your DTI. I know people shy away from new credit before getting a mortgage but it seems new credit cards are more of an issue. We did a cash out refi on our old house with a new lender in the middle of getting a new mortgage for the house we were building and it was all fine. Plus my wife traded cars. The LO said as long as everything stayed close to the same we were fine. We just had to document everything. That said we also both had 720+ scores across the board, were putting 20% down and borrowing much less than we were approved for. Every case is different. Just make sure you talk to a LO and are up front with what you're trying to do up front.
@MakeItAMudLight wrote:If you're currently borderline with your score then I wouldn't want to risk it with the HP and the new account. However if your score is solid and you're trying to prequilfy for a higher amount then you can buy the car to show the lower payment which will lower your DTI. I know people shy away from new credit before getting a mortgage but it seems new credit cards are more of an issue. We did a cash out refi on our old house with a new lender in the middle of getting a new mortgage for the house we were building and it was all fine. Plus my wife traded cars. The LO said as long as everything stayed close to the same we were fine. We just had to document everything. That said we also both had 720+ scores across the board, were putting 20% down and borrowing much less than we were approved for. Every case is different. Just make sure you talk to a LO and are up front with what you're trying to do up front.
^^^This.
It is not the fact of a HP that mortgage lenders are concerned with - it is the run up of debt. It is perfectly logical that you would buy out your current vehicle at the end of the least term. The lender will probably ask for a letter of explanation (for the file) and that will be it. Nothing to worry about.