How would you like to be able to qualify for a $55,000 larger fixed rate mortgage? I know it sounds too good to be true. But it's just simple math. How about we procrastinate. It can wait a few minutes while we have a little fun.
Tomorrow you're getting a raise. See, I told you we were gonna have some fun.
If you're anything like me you can really use that money. But first lunch. You buy. You did just get a raise after all.
Let’s go to dinner. Do you like lobster? Me too.
Now the ball is rolling. You’re spending that raise already.
Buy yourself some new clothes tomorrow, next week a new TV. Don’t forget to save a little for a down payment on a new car.
You deserve it and can afford the monthly payments with your big fat raise.
Or can you?
Sure you can but can you live with $55k less house. WARNING: Here comes the math!
Let’s suppose you earn $5,000 a month and your monthly car payment is $400. Using an interest rate of 8% you just qualified for about $55,000 less house because of that car payment!
Moral: Buy the house first and the car second.
Not only will you be able to afford more house but you may qualify for a lower interest rate.
Already have a car loan? Don’t sweat it, but don’t run out and pay off that loan either. Not even if you can afford to.
When you begin talking to a loan officer ask him what would be best for your situation. No two people have the same situation so me giving you some blanket statement piece of advice about your current loans would be a waste.
You might be better off putting that cash down on the house than paying off the car. Maybe paying off your bookie is a higher priority for you now anyway.
Let your loan officer give you specific advice. Advising you how to get the most house with the least risk is his job after all.
