Does Getting a Car Loan Affect Your Chances for Getting a Home Loan?

A home loan is not so easy to get because mortgage lenders take their time to analyze your credit history. Event the slightest change in you credit history or in you finances and you can banned from getting a home loan. Depending on your income having a can loan can reduce your chances on getting the approval from the mortgage lenders.

Credit inquires are very important because every credit you make is being added in your credit report so if you have too many credits or a bad history in paying your debts it is going to show. For every loan you make you get a credit inquire and with each credit enquirer you lose five point from you credit score. When a lender adds up you credits core he will add up all the credit inquires and determine your rent.

For each new credit that you get the lower your chances are going to be in getting a home loan. The thing is that when you get a cal loan your credit score gets smaller and the credit account age decreases. Because you just got your car loan the balance for it is still high which means that the part of the score which looks at the account balances are affected.

The front end ration is the ratio you have to pay every month if you have a mortgage. This ration has to be less than 30% of your income. If you have a car loan this means that you have a higher level of debts which affects your credit score. Having a low credit score reduces the chances of you getting approval on your mortgage. You can avoid this is you have a big part of the money which you have to pay for the house or if you look for another house which is in your budget.

To sum up a car loan can reduce your chances on getting a mortgage loan. If you have enough money to support the two than this will not be an issue but if you do not than you have to rethink your whole strategy. You have to take into account all costs before you decide to add another debt in your life because you do not want to find yourself in a situation where you can not pay your ratio or you ca not live a decent life. Taking any loan is a big risk and a big responsibility.