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Posted in Mortgage
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Question By
nowineedu

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Will buying a car affect my chances of getting approved for a mortgage?
I have increased my credit score from 525 to about 680 within 4 months--(mostly from disputing incorrect items). My goal is to buy my first home but I really need a car--I just had my first child and i'm a single mother. What should I do? Will buying a car affect my chances of getting approved for a mortgage?

CREDIT BACKGROUND:
* I ONLY have student loans which are deferred on my credit report.
* I have no active credit cards---(I have one that is showing paid in full every month but I haven't had this card since I was 18--i'm now 28)
* I have no tax liens or negative information reporting on my credit report

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The new account will cause your score to drop at first, but after a few months of good payment history, it should improve and continue to grow as you payment history grows.  However, mortgage lenders have to look at you ability to repay the mortgage, so if your car loan now puts you into a financial issue, you may not qualify because of your debt to income ratio, which is not something your credit report provides.  You may want to ask a mortgage lender what debt-to-income ratio they use for qualification for a mortgage and that may help you decide what is best.  Don't ask them for a loan approval or allow them to pull a credit report, though.  Just call and ask.  Best of luck!

Reply by
Eleavor

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I guess my question would be how much the payment is going to be?  Will it cause it to be harder to buy the house you want?  If your ratios become an issue, ask your lender about the MCC / or Mortgage Tax Credits available in every state.

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