The Myplace Playbook // 087

Hey Everyone,

The truck needs tires. There’s a noise you’ve been meaning to get checked, winter is coming, and you’re starting to wonder whether it’s worth putting more money into it. So you have a look at what’s on the lot.

You’re only looking, of course. But then there’s a trade-in offer, a payment you think you can manage, and a heated steering wheel. Suddenly you’re doing a little more than looking.

I get it. Around here, reliable transportation matters. You need to get to work, get the kids to the rink and get home again without wondering what that noise has turned into.

But if buying a house is also on your list, find out what the truck payment does to your mortgage options before you sign.

When a lender assesses your mortgage application, it looks at the payments you already owe alongside the proposed housing costs. That includes vehicle loans, credit cards and other debts. Adding a truck payment can reduce the mortgage amount you qualify for, even if you have good credit and have never missed a payment.

A payment of $400 every two weeks, for example, works out to roughly $867 a month. That’s a meaningful commitment to add while you’re also trying to qualify for a house. The effect on your buying budget depends on your income, other debts and the lender’s requirements.

The useful thing to do is compare the two situations while you still have a choice: what could buying a home look like with your current vehicle costs, and what changes with the proposed loan?

Get the actual payment, payment frequency and loan term in writing. If there’s an existing vehicle loan being paid out as part of the trade, include those details too. I can account for the payment being replaced and help you understand what’s changing.

You may find there’s room for both purchases. You may decide a different truck makes more sense, or that you’d rather put off the trade until your housing plans are clearer. Those are much easier decisions when you’ve seen the numbers.

And if you already have a mortgage preapproval, check before adding new debt. That preapproval was based on the financial information you provided. A new loan changes the picture, so have your broker or lender review it before you commit.

If you’ve already bought the truck and are now wondering where that leaves you, it’s still worth a conversation. I can help you work through the numbers as they stand today.

So if a truck and a house are both on your list, hit reply with the proposed vehicle payment and roughly when you’re hoping to buy a home. That’s enough to get the conversation started.

Enjoy the weekend. And yes, I understand the appeal of a heated steering wheel in January.

-Andrew