What Should I Buy First, a Car or a Home?

As we enter adulthood and start making some money, an entire world of new possibilities and financial decisions gets laid in front of us.

One of the most common dilemmas as such is whether to buy a home or a car.

While buying a car can make your commute easier and add utmost convenience to your living but it will also always be adding some extra thrust on your wallet. Car is an additional requirement that you should only invest in if you have financial backups.

On the other hand, a home is an essential requirement. It’s a tangible asset and its price will always go up. Sure, it will also demand some maintenance cost from you but it won’t ever turn into a liability for you. You’ll always get more than what you invest.

So, buying a home before buying a car is a wiser decision. You can also compare these two by checking out the comparison given below.

Car or house: What should I buy first? Here’s what you should know before making this decision.

Buying a car can affect your credit score

Unless you’re paying for it in cash, a hefty loan amount to buy a car can disrupt your credit score.

A good credit score requires a clean auto loan payment history, and even if you are to pay your debts on time, your payment history will take some time to become a statement.

Buying a car may limit your purchasing power

Purchasing power is the difference between income and liability payments. This is also referred to as debt-to-income ratio. The smaller this ratio, the better are your chances of getting a loan approved.

According to the Consumer Financial Protection Bureau, most mortgage lenders will only approve only if debt-to-income is 43% or below—including new mortgage payment.

Your pre approval could fall through

Let’s say you got preapproved for a mortgage loan. If you get a car loan between that preapproval and closing on your home, you might find that your funding dried up.

But between the stage of approval and closing of your home, you get an additional car loan, you might find that your funding dried up.

That’s because preapproval is based on your finances and credit at the time it was given, but final approval is based on your situation at the time underwriting occurs.

In Summary

The adulthood is full of choices. The decision which we make during these prime years of our lives should not be taken wildly or in a rushed manner. Our decisions define the financial security and kind of lifestyle we are going to have in the years that follow.

Your decision can also depend on how much financial backup you have. If you have a good financial backup, you can invest your money at multiple places. But if your resources are limited, make sure your investments only generate assets instead of turning out to be a liability.

Real estate is always a smart choice to make investments. If you’re looking to buy a home, or make real estate investments to become rich, we’re your buddies. Call +91-99099-03081 or mail us at info@roodland.com