Paying cash for a car then buying a house?
Answer:
It depends how much money you make. If you want to buy a house and you are looking for loan and they see that your car payment are high like $500.00 it will be extremely hard for them to give you a loan with a good rates since they see that you have some debts if you are free of car payments it will qualified you for a better rate. If you can pay cash for a car do it; so you do not have to pay this expensive interest rate for car payment.
When you pay cash for anything, it doesn't show up on a credit report.
paying cash for a car is a good idea, though.
You earned no credit on that purchase. Getting a low house payment? Buy a fixer upper, if you mean a low interest rate, you need good credit. If you finance a car, when you go for your home loan, they will take that debt into consideration when they determine how much you can finance..DO NOT get a 5 year ARM loan unless you plan on moving in 5 years...
Paying cash will not help in you in purchasing a house. When you pay cash, the purchase will not show up on your credit report. The best way to increase your credit score would be the following:
Put about 50% down, tell the dealer you want 1 or 2 year financing (depending on the interest rate, MAKE SURE YOU GET A "NO PENALTY FOR EARLY PAYMENT CLAUSE" in your contract), then pay for 6 months and then pay off the car on the 7th month. Why 6 months you ask?
It takes about 90 days for your car purchase to show up on your credit report and the points are awarded based on a minimum of 6 months worth of credit payments. Then after the 6th month when you pay off the car, it shoots up your credit score. This will help you in getting a lower house payment.
Now I'm assuming all your credit cards are paid off, or you don't use your credit card often. What can also hurt you is, what they call a debt to income ratio, for instance if you have 3 credit cards with a limit of $5,000.00 each, they assume you can use $15,000 anytime and if your income is $45,000/yr (the math is simpler this way), then your debt to income ratio is 3 to 1. So if you have a lot of credit cards and you don't use them, it might be wise to drop 1 or 2 to bring down your debt to income ratio.
I hope this helped. If you have any more questions please feel free to hit me up.
I would suggest to buy a house, unless you are really need a transportation vehicle.
a car's price will face depreciation in the future,
on the contrary, a house's price will increase in the future.
It would make more sense to put a bigger down payment on the house. You would most likely get a better interest rate.
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