How will my joint mortgage affect my solo auto loan application?
May 5, 2014 7:37 PM Subscribe
How will my joint mortgage affect my debt-to-income ratio when I apply for a new car loan WITHOUT a co-signer? (Snowflake details inside.)
posted by ilikemethisway to Work & Money (6 answers total) 1 user marked this as a favorite
I'm planning to purchase a new 2014 Honda CRV this month. Honda is currently offering 0.9% APR on the car for "well-qualified buyers", which is better than the lowest APR my Credit Union has listed (2.9%). I haven't applied for any auto loans yet because I want to make all the applications in as short a period as possible and just did test drives on a few vehicles this weekend. But ideally I will qualify for Honda financing.
Between my trade-in and cash down payment, I'll put down about 16% of the anticipated OTD price (possibly more) and finance about $21,000.
My credit situation: I've pulled my credit reports and found nothing negative. My oldest account is from 2003 and last credit pull was 2011 mortgage. Everything has been 100% on-time. Reasonable credit utilization. Mixed types of accounts — one credit card, federal student loans (never consolidated, so shows up as 4 loans that total $5,500) and a joint mortgage (3+ years into 30 years, with my husband).
Looking at my "credit scores" on various sites, I'm 740+ across the board (I know these aren't real scores, but they're a gauge), and I paid off one car loan on the vehicle I plan to trade a couple years ago. (My research indicates having a past auto loan paid off should help with the auto industry credit scoring model?)
I earn a decent salary, but it's about half of my husband's. We've both been at our jobs for several years. We are both on the mortgage (which is less than 9% of our combined monthly pre-tax income), and he has no other debts. Consequently, I actually pay only 1/3 of the mortgage and he pays 2/3, in line with our incomes. We have not merged finances after getting married last year, and I plan to apply for the car loan solo. If they factor in the entire amount of the mortgage, plus my student loans and the new car payment, I would be at 48% DTI, compared to 25% if you only factor in the amount of mortgage I actually pay personally.
So knowing all that, here's my question... How will they factor my shared mortgage into my debt-to-income ratio when I apply for a car loan alone? What should I expect when I apply?