Don’t Buy a Car if You Want to Qualify for a Home Loan
Can I Buy a New Car Now that Our Mortgage has been Approved?
When buying a home, your first priority should always be to maintain your credit at current levels or decrease it. Buying a car with a loan or even cash is a no-no since it will change your debt-to-income ratio or reduce your savings. Either way, it’s a red flag to your lender.
Even if you’ve been approved by your lender, don’t go out and buy new cars, furniture or other items on credit. Lenders check your credit report right before closing to make sure nothing has changed.
If they see a new car loan they may deny your closing. That means you lose the home and perhaps your deposit. You can always live in your shiny new car that you just had to have.
As part of the initial interview, your lender may ask about your income, savings and your debts. “If just didn’t have this car payment,” he might begin, “you would certainly qualify for a loan to buy this house.”
If you are even thinking of buying a new home, please refrain from any large purchases like cars, boats, RV’s and the like. Your number one priority should be saving for your home purchase.
Keep in mind that you will need approximately 3% of the purchase price in closing costs, not to mention moving expenses. Another car payment, or an increased car payment, is probably not something you need on your plate right now.
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