How would new auto loan affect mortgage qualification chances?

How would new auto loan affect mortgage qualification chances?How would new auto loan affect mortgage qualification chances?
MangosteenMew asked 3 years ago

Hello,

 

I am planning on applying for a mortgage at the end of May or June. My scores are just enough for FHA, or so I think. My question is this. I currently have a 2015 Jeep that is losing value by the day (at least that’s what it feels like).

 

The interest is high (19%) and so is the payment ($ 510) a month. Since I took the loan, my credit has improved 30 – 60 points, depending on which bureau you look at.

I would like to refinance to reduce the payment or get into a different vehicle that will hold value better, however am not sure which way to go on this.

 

-If I refi, I’ll lower my payment for sure, which would reduce my debt to income ratio and look better for mortgage approval. However I’ll still have my auto that litteraly loses value every month. It’s so painful to see it drop so fast.

 

-If I purchase a new/ different vehicle all together, I’ll have to wrap in my negative equity and it will most likely show that I owe about $ 5k more than currently do right before I try to qualify for a mortgage. However I would make certain to get a vehicle to hold value and have a better interest rate for sure. I doubt my payments would go down very much at all in this scenario so I’m not really freeing up any money in the short term.

 

-Aside from all of that, I worry that checking my credit/ having a new account right before a mortgage will lower my score?

According to myFico, my scores are:

 

Mortgage:
EQ – (FICO 5) 600
TU – (FICO 4) 698
EX – (FICO 2) 643

 

Auto:
EQ – (FICO 8) 650
TU – (FICO 8) 722
EX – (FICO 8) 628

 

My #1 goal is qualifying for FHA mortgage… does anyone have any suggestions on the best way to proceed?

Thank you!

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