Financing in 60620>Question Details

Nadina, Home Buyer in Chicago, IL

If I just purchased a car a month ago will this hurt my chance of getting approved for a mortgage? I am a first time buyer

Asked by Nadina, Chicago, IL Sun Mar 28, 2010

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18
Nadina,

The answers below are right on. If you applied for an auto loan, it won't necessarily hurt your chance of getting approved, but it does decrease the amount you could otherwise get approved for. The credit pulled to approve you for the auto loan will lower your score for a short period as well. Here is a link to an article about credit written by the CEO of my company on his blog: http://richardhartian.com/?p=264

The best advice you can follow now is do not apply for any new credit until after you have closed on your home.

Bradley Eggers
Senior Loan Originator
Ardain Mortgage
847-744-0168 (cell)
847-963-1000 (office)
bradley.eggers@ardain.com
1 vote Thank Flag Link Mon Mar 29, 2010
It may or may not as indicated below. IF you are having trouble, give me a ring. I have a wide variety of mortgage structures that can sometimes allow us the flexibility to work with situations that other won't.

I'm available to help you at your convenience if you wish.

I can do a full underwriting approval ahead of time if need be and I also offer credit score improvement programs for free while we work on your mortgage. Everyone likes to raise their score!

If you like my answer, consider clicking on a “Thumbs Up” or “Best Answer”

Regards,

Robert L. Hanson
Gladewater National Bank
First Time Homebuyer Specialist

Direct: 240-752-7549 Cell: 301-651-7822
Email: robertlh66@verizon.net
NMLS# 695929

Rate quote or live chat with me at the link below:

http://www.loansfromrob.com/quote/
0 votes Thank Flag Link Fri Jan 17, 2014
I have all ready been approved to buy a house and the loaner says he can send me the approval letter... If I were to buy a car with credit now will that effect my house loan? Will they check my credit again after I have all ready been approved?
0 votes Thank Flag Link Thu Jan 16, 2014
Angel: Do not buy anything on credit until you have talked with your Mortgage Lender. Period. You will best protect your mortgage approval by taking this important action. After speaking with your Mortgage Lender, proceed upon their advice. Yes, your Credit Report will be pulled again prior to Closing. If anything has changed, it could jeopardize your home purchase. Do yourself a favor and make that call ...
Flag Tue Jan 21, 2014
Hi Angel,
Check with the lender that approved you to see if this will affect your approval. If they can't still approve you, call me and I'll take a look at it. Good luck!

Regards,

Robert L. Hanson
Gladewater National Bank
First Time Homebuyer Specialist

Direct: 240-752-7549 Cell: 301-651-7822
Email: robertlh66@verizon.net
NMLS# 695929

Rate quote or live chat with me at the link below:

http://www.loansfromrob.com/quote/
Flag Fri Jan 17, 2014
Yes Angel! Your credit can be checked again the day prior to closing.
Flag Thu Jan 16, 2014
Nadina, I'd be happy to speak with you and pre-approve (same day) you for your purchase. Friendly, professional service. Check out my profile on Trulia or Linked In (and check out my customer testimonials). Call or email me with any questions. Thank you for your consideration....Neil.
n.coleman@comcast.net or 708-975-8884.
0 votes Thank Flag Link Tue Dec 10, 2013
Best thing is to contact a very good loan officer! I have one!
When you buy a new car, your car loan appears on your credit report. If it raises your debt-to-credit-limit ratio too much, your lender may decide that you can no longer afford to buy the home of your dreams, and thus a car loan could stand in the way of getting a mortgage loan. If you make enough money should not be a problem! Good Luck Nadina!
0 votes Thank Flag Link Tue Nov 19, 2013
Speak to a mortgage lender. They will be able to answer this.
0 votes Thank Flag Link Tue Nov 19, 2013
Speak to a mortgage lender. They will be able to answer this.
0 votes Thank Flag Link Tue Nov 19, 2013
I would advise any potential client looking to buy a home to hold off on any major purchases before closing . It will effect 2 very important factors in the approval process: 1: Credit Score and Inquiries 2: Debt to income ratio.

You have to prioritize when making decisions that are this big. What's more important, a new car or the purchase of your home?
0 votes Thank Flag Link Tue Nov 19, 2013
You may have hurt your chances if you have disrupted your income to debt ratio. It depends on if you have purchased a brand new car with large payments or if you have purchased something used with smaller payments. If your credit score was in good standing before you purchased your car such as a 700+ you will probably be fine, however if it was lower, you run the risk of your score dropping below the 620 minimal and not being able to qualify.
0 votes Thank Flag Link Mon Mar 29, 2010
Best never purchase anything till after you close on a property. It does increase your debt ratio HOWEVER if you have high credit scores, 2 years employment, debt/income ratio is balanced may have little to no impact

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Mon Mar 29, 2010
The industry standard for getting a mortgage loan is a 620 middle score. If your score was close to 620, then it's very possible it may have dropped below 620 now causing you to be ineligible for a mortgage loan. If you were, for example, a 660 or higher then I wouldn't worry too much. Your score should still be high enough to qualify.

As far as your debt ratio, this may limit the amount of home you can afford. Your total debt ratio should not exceed 55%! Don't open up any more credit cards & buy furniture AFTER the closing. Hope this helps.

Michael Cline
mcline@enterprisemortgagefunding.com
0 votes Thank Flag Link Mon Mar 29, 2010
Hi Nadina,

The car note payment would be added into your debt and this would reduce how much house you can buy. Also, I have seen borrower credit pulled by a legion of car dealers in the course of one transaction and the inquiries can drop your credit score..
Judging by your zip code you must be very close to my office Please feel free to stop in and sit with me for a one on one conversation. I can certainly help you navigate the process from preapproval to closing. As a first time buyer, that might help a great deal.

Sincerely,

Nike Fasanya, CMC
President
0 votes Thank Flag Link Mon Mar 29, 2010
Nardina,

That is a great question. Many times you hear what you should or should not do to help your credit.
The two ways it would effect you is... First the auto dealership pulled your credit. This could lower your credit score between 2 and 6 points. Secondly the new payment will be included in your debt to income ratio.
This is something we use to qualify a person for home loan.
Please do not hesitate to contact me to look into getting you pre-approved for a mortgage.
And dont forget if you get a contract by April 30th and close by the end of June you will be able to get the first time home buyer tax credit up to $8,000.
Sincerely,

Steve Smither
Ardain Mortgage Corp.
Senior Loan Originator
847-942-5151 Cell
847-963-1000 Office
ssmither@ardain.com
http://www.stevesmither.com
http://www.ardain.com
Web Reference: http://www.stevesmither.com
0 votes Thank Flag Link Mon Mar 29, 2010
It will not help, but there are too many other factors to consider. My web site has some lender references if you want to check. It does not cost anything to discuss your situation with a lender or 2.


philip
0 votes Thank Flag Link Mon Mar 29, 2010
Yes.

If you incurred additional debt (that is, if you used a loan for part of your financing), it will hurt your chances.

A good mortgage broker can tell you how much it hurt, and what you might still qualify for.
0 votes Thank Flag Link Mon Mar 29, 2010
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
It could potentially affect your ability to qualify for a mortgage.

When determining qualification for a mortgage, lenders use, among other factors, your front-end and back-end debt-to-income (DTI) ratios. Your front-end DTI is for housing, and includes the monthly mortgage principal and interest payment, 1/12 of your annual property taxes and homeowner's insurance premiums, and monthly mortgage insurance premiums and homeowner's association dues, if any. Typically, your front-end DTI can not exceed 31% of your total monthly gross income.

The beck-end DTI includes your monthly housing payment and all other monthly debt obligations. Your back-end DTI typically can not exceed 41% of your monthly gross income, but can be as high as 45%.

The more you pay in monthly debt obligations, the less that will be available for your monthly housing payment. Thus, you might not be able to afford as much house as before you took out the car loan.
0 votes Thank Flag Link Mon Mar 29, 2010
Hi, Nadina

The monthly car note will now be applied against your gross monthly income. So if its 300 a month, that's 300 less you now have to put towards your mortgage, effectively reducing your total loan amount and how much home you can afford.
0 votes Thank Flag Link Sun Mar 28, 2010
It could. You changed your debt to income ratio. It may not change anything. Talk to a lender near you. They can give exact answers based on your real complete situation.
0 votes Thank Flag Link Sun Mar 28, 2010
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