Trading in car before or after mortgage pre-approval?

[SofornichOniss]

I know what is when your adult children don’t want to move out, lol. My son is 30 and still here.

 

[auralia]

Good snow tires might be just as well. I have a rav4 and it doesn’t drive very different from hubbys Corolla.

 

[TheSouthernBelle]

I’m a longtime lurker on the budget board and super proud to say I’ve managed to pay off all of my debt except my mortgage (3 years to go in it). But my question is about my daughter....

she is 25 and is wanting to get pre-approved for a mortgage here within the next few months, possibly looking to move (out of my house thank goodness ) and into her own space. She is a teacher and has over 20K saved. Her only debt is $9k on her car (trade in is worth $12k) and a student loan. The new position she accepted next year will have a commute of about 40 minutes one way and she has a small car (Toyota Corolla iM) with fantastic gas mileage BUT isn’t the best in the snow.

she’s afraid if she trades in now for a diff vehicle (about the same loan amount) that it will hurt her home approval process. BTW her credit score is 815. Any advice would be greatly appreciated!

If she's not already started the process with her lender she is fine to do this but once she's been pre-approved, any changes, even if loan amounts are the same, will impact her credit worthiness. Changing jobs, quitting a job, taking out a new loan, any of that, will be a flag. This also includes how much cash is sitting in her bank account ..... So if she decided to buy a bunch of big ticket items before she closes on her new home, it will affect her loan and can delay closing or cause a lender to deny credit.

She's not starting the new job until next year and moving, who really knows when? If she were my daughter, I'd encourage her to focus on her home goals over a better snow handling car until she has to cross that bridge. If she's not bought a home yet, how does she know she would live 40 min from her new job?

 

[TheSouthernBelle]

So she was looking at a 2019 Mazda CX-3 with low miles that is $17500. If they would give her a decent trade of $11-$12k then best we can figure her payment would stay about the same, just be for a few years longer (she has just less than 3 years left to pay on her car now, this would push her loan back to 5 years). I think she should drive her Toyota until at least October or November and put the travel miles on it before trading. she doesn’t want to screw up any of the process because the market is moving very quickly here.

If the term is longer yet monthly payment is the same, it's not the same amount of debt and would be a larger liability for a creditor to extend a loan.

Again, I would not want to jeopardize a home purchase over a car loan so I'd give my daughter the advice to sit tight. It's a lot easier to buy a car than a house.

 

[tvguy]

Good snow tires might be just as well. I have a rav4 and it doesn’t drive very different from hubbys Corolla.

That's because under the body, a Rav4 uses a Corolla chassis.

 

[ruadisneyfan2]

Again, I would not want to jeopardize a home purchase over a car loan so I'd give my daughter the advice to sit tight. It's a lot easier to buy a car than a house.

This. Focus on one thing at a time. Which is the higher priority?

 

[Gr8t Fan]

Zombie thread

 

[Shelly F - Ohio]

If she's not already started the process with her lender she is fine to do this but once she's been pre-approved, any changes, even if loan amounts are the same, will impact her credit worthiness. Changing jobs, quitting a job, taking out a new loan, any of that, will be a flag. This also includes how much cash is sitting in her bank account ..... So if she decided to buy a bunch of big ticket items before she closes on her new home, it will affect her loan and can delay closing or cause a lender to deny credit.

She's not starting the new job until next year and moving, who really knows when? If she were my daughter, I'd encourage her to focus on her home goals over a better snow handling car until she has to cross that bridge. If she's not bought a home yet, how does she know she would live 40 min from her new job?

I hope she started the process. The post is over a year old.

 

[Darcy03231]

Here's another vote for close on the house and then trade the car in. DD #2 had a Corolla that was lousy in the snow. We got her studded snow tires for the winter and it made a huge difference.

 

[DVCKev]

I would say focus on the house, then get the car once the house is signed and sealed. If done right after the house finishes it will not even be on the credit report yet most likely when she goes for the car.

 

[Debbie Jean]

Maybe since it’s a zombie thread, OP could update on the outcome?

 

[patm95]

Maybe in the meantime get a nice set of snow tires for the winter.

I was going to say this too. The Corolla is a great car that should last a long time. I would take the money and invest in some good snow tires. She wouldn't have to save up much longer to just buy a new car outright.

 

[_19disnA]

Probably not going to happen. The OP last posted on this forum in May, 2021 so might not even be around anymore. I generally look at the date of the original post before offering assistance to someone long gone from this site.

 

[pigletto]

A) this is a super old post
B) the above is spam for that company . Reported .

 

[scrapquitler]

I’m a longtime lurker on the budget board and super proud to say I’ve managed to pay off all of my debt except my mortgage (3 years to go in it). But my question is about my daughter....

she is 25 and is wanting to get pre-approved for a mortgage here within the next few months, possibly looking to move (out of my house thank goodness ) and into her own space. She is a teacher and has over 20K saved. Her only debt is $9k on her car (trade in is worth $12k) and a student loan. The new position she accepted next year will have a commute of about 40 minutes one way and she has a small car (Toyota Corolla iM) with fantastic gas mileage BUT isn’t the best in the snow.

she’s afraid if she trades in now for a diff vehicle (about the same loan amount) that it will hurt her home approval process. BTW her credit score is 815. Any advice would be greatly appreciated!

Best and most for sure answer would be for her to wait to trade in/ buy a new car until after she closes on her house. Doing something between the pre-approval and closing could be iffy and cause a problem