Home Buying in 46142>Question Details

Carolyn, Other/Just Looking in 46143

I am currently renting, but plan to purchace a house (with a VA loan) after paying off credit card bills; should I wait to purchase a car?

Asked by Carolyn, 46143 Tue Dec 22, 2009

is it better to purchase the car and establish a good payment history first or will this new loan hurt my credit for mortgage approval. basically, does it matter which loan i apply for first? I won't have a down payment, but feel it is a good time to buy. as far as approvals go, do student loans or car loans cast the same negative shadow as credit card bills? should I even try for a mortgage if i have any credit card debt??

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Answers

9
Carolyn,

How soon do you think you'll have your credit card bills paid off? Are you concerned with your debt/income ratios? Good payment history will help your credit score. If you're worried about your income/debt you may want to wait to purchase your car. How soon are you thinking you'll want to buy? If your a ways out, it might not be a bad way to establish credit.

Mallorie Wilson
Sales Manager
Associate Broker
Century 21 Diversified
317-590-3434 direct
0 votes Thank Flag Link Tue Feb 11, 2014
I can help you get your credit score up.
0 votes Thank Flag Link Fri Jan 17, 2014
Hi, I'm not sure if you are still in the market now but I work for Fischer Homes in Greenwood and can direct you to our affiliated lender to better answer all of your questions. FYI, Fischer Homes is the #1 custom home builder in Indy. We have also been the centerpiece home at the Indy home show for the last three years as well. text or call 317-379-1842

Darrell Frye
0 votes Thank Flag Link Sat Mar 23, 2013
Absolutely. Your interest rate is determinate upon your debt to income ratio.
0 votes Thank Flag Link Wed Feb 13, 2013
Caroline,

As a veteran myself, I have used my V.A. Loan guarantee more than once. It is a great benefit to having served our country. Another benefit to it is that they actually allow you to carry more debt than on a FHA loan. VA ratio is 41% and FHA is 29%. Because you have served our country, lenders consider you to be more trustworthy than the general public. You are allowed to carry more debt. When you get pre-qualified, your lender can run the numbers to be able to compare all of your options. You do have a lot of options available to you. I work closely with my lender for my clients best interests in mind. They have competitive rates and great service.

Have a Merry Christmas!

Tony Wilson
0 votes Thank Flag Link Tue Dec 22, 2009
Haha, there are 2 different schools of thought here.

1.) Dave Ramsey's School - save until you can pay cash for everything. - Not a bad idea, however, I am not that type of personality. Some are and I admire them for that.

2.) Use the guidelines that are set forth. The mortgage industry is tighter than it ever has been. If you can qualify for a mortgage with your car payment and YOU are comfortable making those payments then just be informed when you purchase and you will be very happy.

Whichever your choice is just be sure you are comfortable in your choice. Make sure when you choose a Realtor and Mortgage Loan officer that you choose someone with experience AND they are looking out for YOUR best interests and not their own.

Again, Merry Christmas and I hope this wasn't too overwhelming :-)
0 votes Thank Flag Link Tue Dec 22, 2009
Caroline,

You have asked some great questions. Debt to income ratio is one of the key factors in determining credit worthiness. Definitely do not purchase a car before the house. Car loans are easier to get than a mortgage. I have a great mortgage lender that can give you details on your current status, if you are interested. Now is the perfect time to purchase a home in the Indianapolis area. I would not wait any longer to purchase a home. There are down payment assistance programs available that can get you in a home right now. There are even $0 down programs for rural areas and $100 down programs HUD homes. I can discuss your purchase options in greater detail, if you like by giving me a call at 317-354-7410. You can visit my website at http://www.WilsonRealtors.net/QuickSearches.html

Tony Wilson
Keller Williams Realty
317-354-7410
WilsonMovedMe@gmail.com
0 votes Thank Flag Link Tue Dec 22, 2009
Good Morning Caroline,

I see Gary has answered and he is an awesome agent but I would like to throw my 2 cents in the bucket. First off, this is a very typical question so don't feel that you have a unique situation as many buyers also have the same needs as you are talking about.

I would approach this problem differently. I would contact a mortgage loan officer to run your credit, see what your debt to income ratios are and see if you have any oddities that you weren't aware of on your credit report. (for instance, I had a mortgage originated on my birthday on my report...meaning I bought a home the day I was born...)

From there you will be able to know how much disposable income you have, if any, to use towards the purchase of a new vehicle. They will be able to tell you how much you can pay per month towards a car and still afford $xxx.xx in a house payment with qualifying within the VA guidelines for residential mortgages. So you may be able to take advantage of a great car loan and purchase a home at a great interest rate!

Lastly, if this is your first home you would qualify for the $8,000 tax credit which uncle sam will mail you once you purchase a home. (within the time frame of the program)

Great question and feel free to contact me if you would like a reference in the mortgage industry or have questions about the tax credit.

Good luck and have a Merry Christmas!!

Jake
0 votes Thank Flag Link Tue Dec 22, 2009
YES- wait to purchase! The last thing you should do when trying to convince a bank you are financially stable is spend and borrow. Rather than go further into debt, set that money aside in a separate savings account so it will be there when you need it. All debt is the same, and a good payment history definitely helps your credit score, but new debt scares the mortgage companies. Save the money that would have been a car payment and you will build a cash reserve which will help you qualify and give you some added stability.
Web Reference: http://www.daveramsey.com
0 votes Thank Flag Link Tue Dec 22, 2009
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