New car?

[Muff]

We are looking to buy our first home this year, we have not been prespproved yet. We haven't even spoken to any lenders YET! My question is would our chances of obtaining a mortgage loan be ruined by purchasing a car  before applying? I will not be applying it will just be my husband due to my short credit history, my husband works in another state & the car he usually drives to work broke down last month & needs a motor  which costs around $3k. We are not looking to fix the car at all because over the past 3 years we've invested over 4k in it. His Fico scores according to this board are 700 702 & 670 being lowest, his yearly income is $75k, only debt he has is one secured card with capital one $300, one overstock card $500 limit , he's had those cards over a year when his scores were much lower. He doesn't deal with credit cards, I handle those 2, he will be going through his credit union to purchase the car..the price is around 35k. We have another car but it's in my name so since I'm not applying with him that won't matter. Will this new loan tank his scores? Without the car his dti is really only 5%  unless you have to include current rent?  With the loan it'll be around 20% .. We want to start the house search in sept & if we go for the car that will be in July 

[ezdriver]

Buy the car and address you husband's immediate need to commute to his job ... and work on the mortgage preapproval/home purchase later on.

[Anonymous]

No, it will not tank your score. If it eats up 15% of his DTI, it could potentially reduce home buying power (qualify for less).

[Muff]

Ok! Thanks a lot,  we are still trying to decide what to do. .nothing is really holding us back from applying for a mortgage NOW honestly. His scores are looking better than they ever have,  I am able to drive him to work now since school is out, so maybe we should get a house earlier than we planned.  But will a house drop his scores?  And hurt his chances on then getting a car? Sorry so many questions 

[Anonymous]

Any new loan will typically result in a temporary, slight dip in score due to the inquiry and affect to average age of accounts. After a few months, the score will usually recover or even improve.

A new mortgage reporting will not make your husband ineligible for a car loan after you close on your home, but if he drops a few points it could possibly put him in a different credit/pricing tier. Also keep in mind that a mortgage often takes a couple months if not longer to start reporting, so if you are quick the mortgage may not even show when you are car shopping.

[frugalQ]

it's easier to purchase a car after purchasing a house than vice versa.  since you are not going to be on the mortgage, are you able to purchase the car in your name? 

i agree with other poster, take care of the immediate need for your husband....and then work on the house.  you don't want to put yourself in a box where you are forced to purchase in a short timeframe.  

good luck!

[Muff]

Ok thanks everyone 

[StartingOver10]

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@Anonymous wrote:

No, it will not tank your score. If it eats up 15% of his DTI, it could potentially reduce home buying power (qualify for less).

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^^^This. A new car could very well drop the amount of income you have allocated to purchase a home. In some markets it doesn't matter because housing is inexpensive. In other markets it can make the difference between qualifying and not qualifying. In my area I see vehicles prevent the buyer from qualifing because it adds an extra $500 to $700 9or there abouts) to their debt.

Before you buy a vehicle, run the DTI figures to see where you stand or more accurately where your husband stands. See how much he can afford without affecting your home purchase. JMO

[Anonymous]

Are you in a community property state?