My Husband and I are stil unsure of renting or buying right now...Its kind of complicated since he just got out of the military and we just moved back to MA across the country and are currently staying with my family. We always used one car because e lived on a small military base...now we NEED to cars because Im starting a part-time job and I have to small children...My husband also works a hour away 48 hours at a time! So a car is a MUST! I have money in my savings but im saving that for the house (we are using the VA Loan) Will it hurt us to take out a small auto loan for like $4,000? My husbands credit score is about 710...We also have no credit card debt at all....We have three cards but only charge gas and pay them off right away...And we have one car loan out thats a couple years old for $12,000. thanks!
2007-08-29 08:24:35 · 7 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
You may want to rent for a while. I saw on the news that with the housing market in such flux, there's going to be a lot of rent specials in areas with a glut of condos.
Besides, housing prices are dropping. It's a good time to wait and see. And will give you a chance to save more for that downpayment.
2007-08-29 08:37:41 · answer #1 · answered by bdancer222 7 · 0⤊ 0⤋
Typically, loan officers recommend waiting until after you purchase your home before taking on new debt. There are two reasons for this:
1. Anytime you apply for credit (regardless of the amount) your credit score will take a small hit. It is usually just a few points and that alone won't kill your mortgage options.
2. Adding a payment for the new car loan will increase your debt to income ratio (DTI.) Mortgage loan underwriters typically are stricter on the DTI than auto loan underwriters.
If your husband actually has a credit score of 710, I would recommend holding off on the auto loan as long as possible. The reason for this is because 720 is a magic number in the lending world. If he can increase his score to 720, it will put you into a different interest rate/approval bracket with most lenders. This would also depend on your credit score however, and if you are going to be on the mortgage and car loan.
If you have enough in savings to purchase the car and still have enough left over for projected closing costs and a respectable down payment, and the car is absolutely necessary, I would recommend using savings.
Hope this helps. Good Luck!
2007-08-29 08:51:40 · answer #2 · answered by jrod57 2 · 0⤊ 0⤋
Sometime during the next year will probably be a pretty good time to buy since it's a buyer's market right now. Therefore, I would focus on doing what you can do to enable you to take advantage of the soft home prices. The car should be a secondary concern.
Will another car loan reduce your credit score? In the short run, yes. With an excellent payment history, it will help it in the long run.
Since you need two cars, my recommendation would be to look into getting an older used car. Choose something like a Toyota or Honda, both of which have good reliability histories and have it checked out by an mechanic before buying (believe me, it's worth the modest extra cost if you're buying an older car).
You might also consider checking with a couple of banks or mortgage companies to get an idea of how much house you can afford, as well as down payment and closing cost estimates. Financial institutions have very recently become much more stringent in their lending practices. Therefore, it would be good to know where you stand before making any signficant financial commitments.
2007-08-29 08:46:29 · answer #3 · answered by Tomel 3 · 0⤊ 0⤋
The 4,000 will count towards your DTI Debt to Income ratio.
It might reduce your overall credit score, not sure how much. Assuming you take out a 3 year loan with Navy Federal or Army Federal, or AF Federal, you can get a good rate and probably owe just over 100-150 a month. Sot that's going to reduce your purchase power for a home by bit more than that.
By the way, VA loans are great, but Navy Federal Credit Union, the Army and the AF versions all have great rates, and will offer good conforming loans that do the same as the VA loan. You might find it a better answer. Each credit union is a bit different so go to their websites:
http://www.navyfcu.org, http://www.airforcefcu.org.
Theres a navy army fcu but it's a small group of cu's in south texas only.
2007-08-29 13:24:39 · answer #4 · answered by Anonymous · 0⤊ 0⤋
since the car is just to get you back and forth to your part time job i would pay cash for a use car -- don't worry what it look like as long as it is not two expense to operate and is reliable -- you should be able to replace the withdrawal in a few months -- i agree partly with the other folks about the housing market right not so before i go looking for a house i would go shopping for a loan and see where your situation fits in the over all picture-- that way you will have an ideal of the price range of the house you will be able to finance and then be on the look out for a house bargain!!!
2007-09-02 02:51:12 · answer #5 · answered by Anonymous · 0⤊ 0⤋
my hubby and i have a house and two cars and sometimes we reminisce about the good old days when we rented. my advice to you right now is....yes any outstanding debt will go against a home loan. they factor all that stuff in. but with the economy being so shaky i woulld recommend renting for awhile. at least until you know where you guys stand financially. you can always break a lease but getting yourself out of a mortgage can be disasterous. good luck!
2007-08-29 08:30:33 · answer #6 · answered by judester 2 · 0⤊ 0⤋
loan officers recommend waiting until after you purchase your home. I found interesting information about your answer car loans here. http://all-debt-consolidation-loan.blogspot.com/2007/08/car-loans.html Good luck!
2007-08-30 03:48:13 · answer #7 · answered by Anonymous · 0⤊ 1⤋