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will buying a car lessen my change to get a mortgage


obxdude
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I found a great deal on a car but, I am unsure if it will lessen my chances of buying a home at the end of the year. My car is paid for and I had planned on keeping it for another year. I just had to have work done to it and it still needs about $500-$600 of work (plus will need new tires and exhaust soon). So, can anyone tell me if adding a car loan will decease my chance for a good mortgage? My scores are now all over 700 but, i do still have a neg judgment on one report. Do car loans use the same utilization that cc use? It would take me 1 1/2 to 2 years of payments to get under a 35% utilization for the car. But, I will be looking to buy a house at the end of the year.

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Car loans are reported as installment, and as such aren't affected by high utilization. However the fact that you'd have a new trade line would likely reduce your scores for a few months until it's gained some history. Also the new car payment would figure into your debt ratio, potentially lowering the amount you could qualify for.

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Car loans are reported as installment, and as such aren't affected by high utilization.

This is may not be correct. In my case the only loan I have added in the last year was a new car loan. My scores tanked, and the "suggestions" from true credit and PG were to reduced my installment debt to less than 65% utilization. Also, the "loan guy" at the car dealership specifically said to my that both car and home loans have a utilization factor for scoring...

His exact words were something to the affect ...

" I've never seen a score over 800 without being below 50% utilization on your mortgage"

(At the time I had an 803, now the loan is nine months old and I'm still at 741.. :x )

I think the scoring model has SO many variables that we can't accurately predict the EXACT affect of any individual item to any individual credit file.

However, I agree with liverichly, if you get a new car loan BEFORE the new home loan you might create a problem for yourself.

The new loan will change your debt-to-income ratio

and

Your score will go down...

Good luck,

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Not an expert here, but I am kinda in the same boat. Well, kinda. I financed my 1st vehicle in Dec. of 2005, and because of my payment, the amount of a loan I can be approved for, (for a home), has decreased. So I am trying to trade in my truck for something cheaper, and more fuel efficient, so I will qualify for more. If I were you, I would wait until I had closed on my home to finance a vehicle. Good luck!

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Unless you NEED a car now, you should wait until after you close to even start looking.

If you do NEED a car now, you should consider a cheaper one - one that won't as greatly affect your debt to income ratio.

I'd really recommend waiting until you're in the new house.

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After reading past post about car loans and advice from this board I have decided to hold off on the car. I WANTED a newer car but, I didn't NEED a newer car. I have decided to just focus on my number one goal, buying a home. But, I was still interested in know how it effects score and getting a mortgage.

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After reading past post about car loans and advice from this board I have decided to hold off on the car. I WANTED a newer car but, I didn't NEED a newer car. I have decided to just focus on my number one goal, buying a home. But, I was still interested in know how it effects score and getting a mortgage.

The "I gotta have it" mentality is what hurts a lot of people, especially when it comes to cars and high pressure salesmen...

If you got good scores, then it not that big of an issue because you can still get a prime rate without having prime scores... But the biggest problem is the debt ratio... Again, many underwriters stretch that ratio to allow more mortgages but there is always a limit... And that would probably be your biggest obstacle...

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