will buying a new car affect ability to get a mortgage/

[Aurora D]

We are planning to list our house soon to buy something a little bigger/better. In the meantime we desperately need a new car. Our credit is mediocre...600's. Will getting the car first really be detrimental to getting a mortgage soon after?

 

[tvguy]

I assume you will be financing the car. It certain could have an impact, but not necessarily. Just buying a car and paying cash could too I guess, since it reduced how much money you have saved.

I suspect people with much lower credit scores have purchased cars and houses at the same time. It could exclude you from the lowest interest rates.

 

[pigletto]

It's a piece of the puzzle. You'd have to figure out your debt to income ratios if financing. Depending on what you are already carrying in debt it could absolutely effect the amount you are able to borrow and interest rate.

 

[Shelly F - Ohio]

Yep.. They look at your debt to income ratio and when lending money. Especially now a days lenders are very picky about lending money. With a score of 600 you are looking at a high interest rate for both the car loan and the mortgage.

If you need a car now I would not list my house for at least 2-3 years. That way the amt owed on your car loan will be less and not hurt you so much when you apply for the mortgage loan.

 

[BubMunkeyBles]

Definitely, even more so in that credit range.

 

[MommyJack]

If it affects your debt to income ratio it will lower your credit score.

 

[Disworldluv]

If it affects your debt to income ratio it will lower your credit score.

I would definitely rethink a new car currently (if at all possible) until after you get a new home.

 

[lost*in*cyberspace]

I would definitely rethink a new car currently (if at all possible) until after you get a new home.

I would rethink moving as well. Work on saving and improving your credit score. Are you sure you will even be able to get a mortgage?

 

[Robbi]

I'd buy the house first and get a car after. With a score in the 600's, you'll already be smacked with higher interest rates for both the mortgage and your car.

Getting the car first could even prevent you qualifying for a mortgage. They have gotten really tough unless you have 20% or more as a down payment. My husband and I had a 30% down payment, excellent credit-800- and could have bought our beach house with cash. It took us 2 months to get our mortgage. Now, that was right after the housing crash. Lenders may have lightened up some.

 

[LovemesomeDW]

When you say 600's, are you talking high 600's or low? If it's low, then I definitely would not add new debt at this time. Adding new debt will lower your credit score briefly until it ages and is no longer considered new debt. Your debt to income ratio will play a big part in your approval and interest rate for a new mortgage. Have you spoken with a mortgage specialist to discuss your current scores and/or gaining a preapproval? Mortgage approvals aren't the easiest these days and people with 700+ scores even have to jump through hoops sometimes to get the deal closed. Can you hold off selling your home for awhile and purchase a new vehicle now?

I hope it all works out for you...good luck!

 

[anabelle]

The people who were going to buy the house next door couldn't finalize the mortgage because they bought a car.

 

[DawnM]

Was there more to the story? Low credit, trying to buy a house they really couldn't afford for their income, etc…?????

We bought a car right before a mortgage and had no trouble at all. But our credit is in the 800s and we were buying a much lower cost house than the bank said we "could" afford.

Dawn

The people who were going to buy the house next door couldn't finalize the mortgage because they bought a car.

 

[DawnM]

OP, you didn't ask for this advice, but I am going to give it to you anyway……I personally would not buy a new car unless it was absolutely necessary.

I also would not move and get a new mortgage until my credit could get over 740. 740 is the magic number for getting the lowest interest rates.

Dawn

 

[Judique]

We are planning to list our house soon to buy something a little bigger/better. In the meantime we desperately need a new car. Our credit is mediocre...600's. Will getting the car first really be detrimental to getting a mortgage soon after?

i guess my first question would be what are the numbers? How much equity do you have? the amount you put down on the new place can have a significant bearing.

Or are you looking to trade up and have no equity?

I've always heard don't buy anything right before you apply for a mortgage.

And, what do you mean by desperately need a new car? Maybe transportation is the first need. It's really hard to tell from a small paragraph on a message board.

 

[tar heel]

Yes, it absolutely will affect your ability to get a new mortgage as well as the amount you are able to borrow.

Here's some more unsolicited advice. You may need a "different" car, but you don't need a "new" one. None of us do.

 

[wiigirl]

I would definitely rethink a new car currently (if at all possible) until after you get a new home.

x2

 

[lucyem]

We are planning to list our house soon to buy something a little bigger/better. In the meantime we desperately need a new car. Our credit is mediocre...600's. Will getting the car first really be detrimental to getting a mortgage soon after?

Our house is on the market. My agent, whom has been in the business for 15+ years, warned us that mortgage lenders have swung from super easy to get a loan to super hard. She has seen some really wacky things pop up and either stop the mortgage totally or at least put a hold on the transaction. Her advice was to do NOTHING until we were settled again. She literally watched a bank put a hold on a mortgage because the buyer, her client, deposited $800 into his checking account and it was out of the ordinary. It was his rent deposit being returned.

OP the way you phrased your question "buy something bigger/better" makes it sound like you do not have to move. Have you thought about maybe getting a car as part of a plan to get your credit score up? Then look into moving in another year or so? It might be worth speaking to a bank mortgage officer, who has some experience, and see what their advice would be to get your credit score up and the best way to go about all of this.

 

[Robinrs]

Yes, it will definitely affect your credit. Please wait till afterwards.

When we were buying a house the mortgage broker told me it's not everyday he finds two people with jobs WITHOUT car notes! He was THRILLED.

Try to hang in there... good luck!

 

[Golf4food]

The new loan will have a small negative impact for at least six months after it is opened.

The new balance will have a small negative impact until it has been paid down to about 80% of the initial balance.

The new balance will have a small negative impact as it will increase your debt and lower your debt-to-income ratio.

Those are all cumulative - each will "add to" the negative impact.

Now, once you have made payments on time for at least those first six months that payment history will start to become a positive towards your score. The balance and debt ratio would still be a negative if they are too high.

Figure out which one you really "need" and focus on that. If you don't actually "need" a new house and just "want" one, then you'd be much better off waiting a year or two or more, save, pay off debts, etc.

 

[diamondpixienc]

If it affects your debt to income ratio it will lower your credit score.

^^This^^ I would hold off on the car for now.