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How can a car loan affect my mortgage?

I just took out my car loan when I found out I'm pregnant with my first child. Now my husband and I want to buy a home, but will my car loan affect a mortgage?

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Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Congrats on the new arrival to the family! Since parenthood is about to make your life busier, it’s a good idea to plan out your
car loan
and mortgage now. The amount of debt on your car loan can limit what kind of mortgage you qualify for.
Your car loan will be a large form of debt visible on your credit report. The more you’re paying for the car each month, the higher your debt-to-income ratio will be, which may lower the amount of money lenders will give you for a mortgage.
If you can’t get the mortgage size you want with your current car loan, consider
refinancing the car
to extend the loan and get lower monthly payments. Alternatively, you could pay off more of the loan now before applying for a mortgage.
Since you will need at least 3.5% for a house down payment, it’s a good idea to look for other ways to free up some cash—including finding savings on your car insurance. Use
Jerry
to compare quotes from up to 50 top providers and switch to a more affordable policy in-app.
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