Posted by Ben CA on July 07, 2002 at 23:44:43:
I like the way you think Steve. I learned this justification of luxury items(even my own house)with the cashflow from assets, through Robert Kiyosaki.
Credit score - Posted by janet
Posted by janet on July 01, 2002 at 10:03:56:
My credit score is high 600’s low 700’s and I’m interested in purchasing both a car and investment property. If I purchase the car first, will that lower my credit score and reduce chances of good financing on my property?
My realtor nearly had a heart attack when - Posted by Steve D
Posted by Steve D on July 01, 2002 at 12:23:25:
I turned up a few days before closing in a new car… he relaxed when I told him I’d discussed it with the mortgage broker first and he said no problem with the amount I wanted to spend…
My realtor claimed in his career he’d had 2 deals fall apart, where people bough a car between making the offer and closing, both times the mortgage company backed out when they ran the credit check right before closing.
In my case, the effect on the score was minimal (a credit enquiry, plus a new account), but it was the effect on my debt/income ratio’s that concerned my realtor.
Personally, I’d go for the property before the car - not just because of the credit score, but a car is a depreciating asset with negative cashflow, the investment property should be the other way round - lever one to buy the other - if you can find a property that will appreciate quicker than the car will depreciate, and will provide enough cashflow to make the car payments, the net effect on your wealth and cashflow will be zero for the short term (i.e. free car), then once the car loan is paid off, the investmest kicks in… I like to tie my luxury items to assets that pay for them whenever I can - it helps me justify them.
Re: Credit score - Posted by Bruce Lawson
Posted by Bruce Lawson on July 01, 2002 at 10:16:13:
Hi Janet,
If you purchase the car first it could affect your ability to purchase the house, the car payment will increase your Debt/Income ratio which is an important factor in the lenders equation. Conventional lenders use 28% towards a mortgage and 36% for total debt, if you have the room to do both the house would be my first choice.
Sincerely,
Bruce Lawson