If you haven’t already please review the previous blog article “What YOU Should Know about YOUR Credit” as well as “Helpful Hints to Enhance YOUR Credit” to better understand how credit scoring works and what you can do to ensure you are in the best possible position.
One of my clients had contacted me this morning and asked a question that I have probably answered a hundred times so I thought it may be of value to you the reader and soon to be empowered and educated homebuyer;
Does getting a car loan effect the mortgage approval process in any way?
Yes, it absolutely does!
Obtaining a new automobile, if financed, is not advisable and would negatively impact your credit which is one of the three keys to qualifying.
The 4 rules you should be abiding by with regard to your credit when purchasing a home are;
1) Do Not miss any payments
2) Do Not close any accounts
3) Do Not open any new accounts
4) Do Not max out your credit cards
Having said that, sometimes you have little choice when it comes to an automobile, we all need transportation. However, just understand that opening a new auto loan can and will negatively impact your credit in two ways;
1) Lowers your FICO score (credit)
2) Increases your debt to income ratio (income – if the payment is larger than your old loan it will negatively impact your purchase power)
In summary, only do it if it is an absolutely necessity, if it is a “want”, put it on the shelf until after you have accomplished your goal of homeownership.
When purchasing real estate choosing the right professionals to assist you in this journey will be the key to YOUR success, I have been blessed in my career to surround myself with whom I consider the very best at their profession and welcome you to contact me and my team to help Guide You Home.
Content submitted by;
Sr. Mortgage Advisor, NMLS #397424
Province Mortgage Associates, Inc., NMLS #2861