cancel
Showing results for 
Search instead for 
Did you mean: 

In the middle of mortgage app - need new vehicle soon

tag
Anonymous
Not applicable

In the middle of mortgage app - need new vehicle soon

We are in the middle of finalizing our mortgage. Our situation is a bit unique so bear with me for a short back story. We are in a lease purchase and living in the home we are buying so there isn't much of a risk of losing out on the contract. We are now able to qualify for the mortgage to be in our name after working super hard the last couple of years on credit. We turned in the all of the paperwork last Friday (last Thursday branch manager pulled credit and said we could go ahead). It will probably still be around 30 days to close.

 

We need a new vehicle pretty soon. I know we need to wait for closing before applying for any new credit, but I am trying to figure out if we should apply before the house shows on our credit reports, or wait a couple of months for it to report and for our scores to recover from having a new account.

 

This is our first mortgage so I don't know if having a mortgage will bump our scores after the initial new account hit, or if it will take a while.

 

Debt to income ratio isn't much of an issue. We have 3 vehicle loans right now (one will be a trade in on the new vehicle and one we are going to list for sale) and we are at about 25% DTI. Adding in the house payment will still be under 30%. I'm just not sure when the best time to apply for the car is.

 

Thanks in advance!

Message 1 of 6
5 REPLIES 5
StartingOver10
Moderator Emerita

Re: In the middle of mortgage app - need new vehicle soon


@Anonymous wrote:

We are in the middle of finalizing our mortgage. Our situation is a bit unique so bear with me for a short back story. We are in a lease purchase and living in the home we are buying so there isn't much of a risk of losing out on the contract. We are now able to qualify for the mortgage to be in our name after working super hard the last couple of years on credit. We turned in the all of the paperwork last Friday (last Thursday branch manager pulled credit and said we could go ahead). It will probably still be around 30 days to close.

 

We need a new vehicle pretty soon. I know we need to wait for closing before applying for any new credit, but I am trying to figure out if we should apply before the house shows on our credit reports, or wait a couple of months for it to report and for our scores to recover from having a new account.

 

This is our first mortgage so I don't know if having a mortgage will bump our scores after the initial new account hit, or if it will take a while.

 

Debt to income ratio isn't much of an issue. We have 3 vehicle loans right now (one will be a trade in on the new vehicle and one we are going to list for sale) and we are at about 25% DTI. Adding in the house payment will still be under 30%. I'm just not sure when the best time to apply for the car is.

 

Thanks in advance!


Apply AFTER you close on your mortgage.  Making changes during a mortgage app (adding new debt) is one sure way to mess up your mortgage application.  Not 100% of the mortgage apps with new debt will fail but the most common thing I see  when a borrower fails to get to closing is the addition of an auto loan. 

 

Financing a vehicle after closing on a mortgage is usually a slam dunk.  Financing a new to you auto during a mortgage closing causes issues. Wait until you have officially closed and funded. Then go vehicle shopping. 

Message 2 of 6
Anonymous
Not applicable

Re: In the middle of mortgage app - need new vehicle soon

Thanks!! I knew we needed to wait until closing, for sure! I am just not sure if we should buy before the mortgage line shows on our credit reports (go down the day or weekend lol) after closing to buy, or wait until the mortgage is actually reporting. Any time we have added a new trade line our fico takes a hit for a short time, but I know mortgages help scores so I am stuck on which is better as far as credit score goes.

 

Will our scores take a short hit from the mortgage reporting as a new trade line, or will they go up because we finally have a mortgage account on our credit reports? We have never had a mortgage loan so I am confused how it will affect our scores Smiley Happy

Message 3 of 6
MauiMan85297
Established Contributor

Re: In the middle of mortgage app - need new vehicle soon

After you mortgage closes and you have keys in hand (which you already do-lol) then you should go after that vehicle before the mortgage hits the CR, usually that tradeline will reduce your points because of the current debt vs what your balance is on the debt (brand new).



Message 4 of 6
Anonymous
Not applicable

Re: In the middle of mortgage app - need new vehicle soon

Thank you! That is what I wasn't sure of! I didn't want to run out after closing and buy a car then have the mortgage report and raise our scores higher to help with interest rates Smiley Happy

 

I am sure eventually it will raise our scores, my vehicle just isn't going to wait for that to happen Smiley Very Happy

Message 5 of 6
Anonymous
Not applicable

Re: In the middle of mortgage app - need new vehicle soon

Our monthly payment is only going to be $200 under what it currently is, if that makes a difference in the discussion Smiley Happy

 

We also plan to just keep the same amount we are paying now on automatic draft so in the end, the amount we pay monthly toward the house is not going to change after the mortgage is fully in our name anyway.

 

The only way the amount we pay/month is going to matter is if we lease or finance through a dealership. Our credit union is funding our mortgage so if we use the credit union, or the bank where I work they are already going to know we have a mortgage getting ready to report. Both the credit union and the bank where I work will have the same interest rate regardless of whether there is a change to our scores, or not.

 

Leasing/purchasing through the dealership interest rate will change, though, if our scores take a dip once the mortgage reports. The only reason we would use the dealership financing is if they can give us a lower apr than our credit union or the bank where I work, or if we decide to lease a vehicle rather than purchase. My husband's scores are much better than mine but they are already very borderline since we had a lot of rebuilding to do after a bad deployment/pay issue before he retired from the military. Any reduction, even small will bring them back under the "good" range to the "fair" range (Exp and Eq are hovering just under "good" by about -10 points and TU is over "good" range limit by about +15 points).

 

Hopefully next month they will all be up in the "good" range so we have more options for financing. I know we can finance through the bank where I work at 4%, but if we can get lower than that through GM (we plan to buy a Suburban), it will help with the monthly payment because Suburbans ain't cheap lol

 

Thank you everyone for your help and insight! Credit scores can be such fragile and unpredictable things that sometimes I'm afraid to even breathe the wrong way Smiley Very Happy

 

After working so hard to rebuild I don't want to make any uneducated decisions that will cost us money unnecessarily Smiley Happy

Message 6 of 6
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.