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I have a question that I haven't been able to find answers to on here?
So I'am looking to purchase a house (finance) but am also in the market for a car as well. My question is if I pay for a used car in cash (11k roughly) and have more than plenty in savings for a 15-20k down payment and closing costs will this affect getting approved for a home loan? Only because I have heard making big/major purchases are not the best idea.
Financing - or leasing a car might actually be the better option. Normally I wouldn't recommend this, but you're better off overall having a low monthly car payment and more cash on hand.
The best way to do that may be to lease something like a corolla or mazda3 for $100-120/month - a low payment that won't have much impact on DTI and won't cost a lot to insure/run/maintian.
If $100 does impact your DTI, reconsider buying a less expensive house because you're cutting it too close.
If you have the cash, dont finance or worse, lease a car before buying a house. Purchasing a car with cash will not hurt your chances of financing. But may lead to a lower down payment.
I hadn't planned on financing the car I have the cash for the car and the cash for a down payment on a house as well with money still in the bank. I just didn't know if spending cash on a car before buying a house looks bad.
The house price range would be around $180k to $220k, which I have a sufficient down payment for already.
Without knowing your asset and reserve situation, it's hard to say what is the best option. If you NEED a newer reliable car that has a fixed ownership cost, lease. If you are a few months away from your next trust fund dispursement and aren't worried about having liquid funds on hand after moving in - buy the used car for cash.
I'm wondering why you need to buy a car and house at the same time. To me that says you do not own a car and decided to move to a remote area where you need one. If you aren't used to owning cars, keep it as simple as possible. Don't buy an old $11K car and have no money for repairs.
Don't do anything until you talk to a loan officer..........this doesn't require a face-to-face sit down, but someone that has reviewed your tax returns and paystubs. You could very easily afford extra debt and need every dime or your score could be in the toilet and neither would matter. Right now, we're not able to do anything but throw *ahem against the wall and hope something sticks.
If the choices are (a) buy a car with cash (so no effect on DTI) and have a lower down payment or (b) put off buying the car and have a 20% down payment, I would go with (b) every time unless the need for a car was absolutely desperate.
A 20% down payment will not only allow you to avoid PMI, but may also earn you a lower interest rate (depending on other things of course like your credit score).
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