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Auto Loan Before Mortgage?

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Auto Loan Before Mortgage?

We hope to have our credit fixed up and get a mortgage next spring/Summer. We currently have a high interest rate auto loan. If we trade it in for another car late this yer with a much lower payment will that be a negative towards getting a mortgage?
Bank of America 7,000 CL - Chase Freedom $3000 CL - Capital One 9,000 CL
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Established Member

Re: Auto Loan Before Mortgage?

Probably not. You'll take a slight hit for the credit pull on the new car loan, but that will not be as big of a deal in a year's time. Also, having a lower car payment will help in terms of your DTI.

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Re: Auto Loan Before Mortgage?

I think it would be better. Should help your DTI. I am actually currently in escrow after purchasing a new car with a high interest rate on 12/31/2011. I was told I would have probably been approved for a bigger loan but because my car payment was so high they couldn't approve me for more because of my DTI. I probably should have waited on the new car but just had my first child and needed something bigger than what I currently had.

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