Buying a new car or your first home, what makes the most sense?
We all need a roof over our head and some means of transportation to get us to and from work. Sometimes it can be a tough choice when there is only so much money. “Do we buy the new car or our first home?”
Buying a new car or your first home
One of the most common road blocks for first time home buyers in qualifying for a new home is the “auto payment”. I meet many first time home buyers who have done all the right things; paid down debt from student loans and credit cards, saved for a down payment to buy their first home and then a few months before getting ready to shop for their home they buy a new vehicle that comes with a big monthly payment for the next 5 years. The high auto payments push their debt servicing over the limit making it impossible to qualify for the mortgage. The result – they are left paying rent and a high car payment. Those new set of wheels could cost you more than you think.
For example a car payment of $500 per month could drop your qualifying by $20K. For each $100 per month auto loan payment you will lose another $20K in qualifying. For those with a $700 per month auto loan payment you qualify for $60K less to buy a home. That can make a difference!
Click the link below to listen to my video.
Which comes first, the new car or your first home?
Buying your first home is a big deal. So before you make any purchases for big ticket items like a new car – talk to your independent mortgage broker. We can guide you through the criteria to qualify for a mortgage so you can fully understand the process and all the costs associated with buying your new home. Then you can choose the right vehicle for your budget and your needs. Buying a new car or your first home can be an easier decision if you have the numbers in front of you to make an informed decision.