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John Novak, Real Estate Pro in Henderson, NV

How much will buying a car impact my home purchase?

Asked by John Novak, Henderson, NV Sun May 20, 2007

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11
The safest bet will be to wait until you close. It is much easier to get approved to buy a car after you close on a house than to get approved to buy a house after you have purchased a car. Just as Melissa says when you apply for a car loan they do many inquiries on your credit report which can affect your credit score.
3 votes Thank Flag Link Thu Aug 9, 2007
It's just numbers. If your debt to income ratio stays below an acceptable figure for underwriting...buy the car Check with a loan originator first to assure that you are pre-approved with the expected payment.
Web Reference: http://brian-brady.com
3 votes Thank Flag Link Tue May 22, 2007
A good rule of thumb for a buyer waiting to close on a home is to NEVER make a large purchase that will effect the ability to qualify for the loan. So many buyers forget this and end up not being able to purchase the home...so sad.
3 votes Thank Flag Link Mon May 21, 2007
I agree with Jay. I had a buyer purchase a new car a week before we were scheduled to close on my listing. Their agent and loan originator never explained how this would affect their debt to income ratio as well as how the “inquiries” would affect their credit score. Needless to say, the closing never took place with this buyer.

Melissa Mancini, Realtor, CBR, GRI
Web Reference: http://MelissaBMancini.com
2 votes Thank Flag Link Wed Aug 8, 2007
Kristal is correct.. buyers need to understand that a lender will check their credit and bank accounts on the day of funding for any major purchases. I had a buyer who decided to refinance an income property and take out a large sum of cash three days before closing. He couldn't understand why the lender refused to fund the loan because his new payment changed his ratios.
2 votes Thank Flag Link Mon May 21, 2007
Kaye Thomas, Real Estate Pro in Manhattan Beach, CA
MVP'08
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If you are overly qualified, it may not have any impact. If your credit score is 800 and your debt to income ratio is well within the guidelines AFTER the car is purchased, you shouldn't hold up your life decisions "just in case".

If you are barely qualifying now with no car payment, then maybe you don't want to wait until after you buy your property. If you are not going to be able to afford both the car and the house, isn't it better to know that now?
1 vote Thank Flag Link Sun Aug 12, 2007
The issue here is timing. If you're in the process of trying to obtain a loan for a home purchase, I have just one piece of advice: DON'T DO IT! wait until AFTER you close on the property to buy the vehicle. Adding more debt when you're trying to get a loan can be the kiss of death for your ability to finance a property.
1 vote Thank Flag Link Wed Aug 8, 2007
Any added debt when seeking a lona, whether car, furniture or other type of financing can affect your qualification. Check with your mortgage professional prior to opening any type of financing, even a credit card as they can help prevent a disaster.
1 vote Thank Flag Link Wed Jun 20, 2007
A car payment not only impacts your debt to income ratio, it will also bring down your credit scores. Check with your Mortgage Professional before making any large purchases.
1 vote Thank Flag Link Wed May 23, 2007
If you finance, your new monthly payment will be included in your liabilities. It may result in a total debt ratio above the lender's guidelines for your loan if you're already in the process, or if at the qualifying stage, it will likely reduce the maximum amount you can borrow. If you pay cash it may reduce the amount of cash reserves the lender needs to see in your account. But it really depends, and you should ask your loan officer or mortgage broker how it affects you - it could impact you quite a bit, or not at all.
1 vote Thank Flag Link Mon May 21, 2007
It will impact it quite a bit. If you are looking to purchase a home I'd suggest on waiting til after you buy. The lenders look at it as a liabilty.
0 votes Thank Flag Link Sun May 20, 2007
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