Need advice for my Tesla order! [ok to order while applying for a mortgage?]

[Kamrankhaled]

Hey all, so I have finally decided to purchase a M3, but I am in a dilemma.

My mortgage closing is on Dec 10, but my bank said it’s already a firm offer and they won’t do a credit check again but everyone is suggesting that I should wait till closing to order.

How does the financing part of ordering work? Can I order now and do the financial part of the application after dec 10 ?

Also, m3 sr+ date shows June in CA vs Dec for Long range. Assuming it’s 2021 dec and not 2022! Is the long range worth it? I have the finance to pull it off so that’s not an issue.

Would really appreciate your feedback !

 

[jjrandorin]

Do NOT (do not do not do not do not) change ANYTHING AT ALL about your credit, while you are in the middle of a mortgage process. DO NOT DO IT (just dont).

Now, with saying all that, you could theoretically ORDER the car, and put that you are paying CASH, and that wont do a credit pull. If however, tesla came back to you and tried to deliver the car and you still had not closed on your loan, you would need to delay delivery until AFTER YOUR MORTGAGE HAS CLOSED... meaning you have the keys in your hand.

TL ; DR -- you could order the car, as long as you put you are paying cash it wont make a pull on your credit. Do not do anything that would make a hard pull on your credit during this time, including (for example) going furniture shopping and signing up for store credit (or putting said purchases on your credit card), or anything else that will change your credit profile (or substantially change to a lower number your cash in the bank).

 

[nametaken]

First thing we were told by our agent and our mortgage person was DO NOT go buying any cars or changing any jobs until after you close!

 

[Kamrankhaled]

Do NOT (do not do not do not do not) change ANYTHING AT ALL about your credit, while you are in the middle of a mortgage process. DO NOT DO IT (just dont).

Now, with saying all that, you could theoretically ORDER the car, and put that you are paying CASH, and that wont do a credit pull. If however, tesla came back to you and tried to deliver the car and you still had not closed on your loan, you would need to delay delivery until AFTER YOUR MORTGAGE HAS CLOSED... meaning you have the keys in your hand.

TL ; DR -- you could order the car, as long as you put you are paying cash it wont make a pull on your credit. Do not do anything that would make a hard pull on your credit during this time, including (for example) going furniture shopping and signing up for store credit (or putting said purchases on your credit card), or anything else that will change your credit profile (or substantially change to a lower number your cash in the bank).

I know I know! I am not doing financing now, I am hoping to place an order now in cash(or in 2weeks to be safe) and switch it out to loan later so it doesn’t effect my credit.

 

[jjrandorin]

I know I know! I am not doing financing now, I am hoping to place an order now in cash(or in 2weeks to be safe) and switch it out to loan later so it doesn’t effect my credit.

I dont remember what information is on the order, so I dont know if it would be reported or show up as a liability. If I was in your shoes, I would not order, because I wouldnt want any chance of anything interfering.

I am not an underwriter or loan officer, but have talked (over "beverages") with one I know pretty well, and they have told me story after story of people going out and trying to buy furniture for the new house, or cars ("moving to the burbs! need a new car to make the new drive to work!") or stuff like that, that ends up either gumming up stuff (changing debt ratio) or even getting them denied on the loan even though they had conditional approval.

Not one story, not 2, "story after story".


shrug...I just wouldnt, your banks "firm" offer is based on your current debt to income ratio. Putting cash doesnt run your credit, but I have no idea if it will show up. It "shouldnt" but a home purchase shouldnt be hanging on "shouldnt"... but thats just my opinion.

 

[BigNick]

Also don't pay off any existing car (or other major) loans. It actually has a negative effect on your credit score by "reducing" your credit history. Don't cancel any unused cards, either.

 

[tm1v2]

I know I know! I am not doing financing now, I am hoping to place an order now in cash(or in 2weeks to be safe) and switch it out to loan later so it doesn’t effect my credit.

As long as your mortgage closes before you switch your order to financed, that should be 100% fine. Your car financing application will reflect your new mortgage debt of course, however that's probably better than the other way around (better than financing a new car right before applying for a mortgage).

It's also fine to buy a car with cash, or make any large cash purchase, while applying for a mortgage IF AND ONLY IF the cash comes from an account you did NOT share as part of your mortgage application.

 

[CreoUCLA]

It's also fine to buy a car with cash, or make any large cash purchase, while applying for a mortgage IF AND ONLY IF the cash comes from an account you did NOT share as part of your mortgage application.

Cash purchases, as long as you still have enough in the account still for the funds you need to close the loan with, are fine from the same account(s) you provide to the lender. Underwriters will typically want document large deposits (not withdrawals), and the asset statements you provide at the time of a mortgage application usually don't expire for ~120 days.

Most lenders will order a "soft pull" credit report (without FICO/credit scores) within 7-10 days prior to the new loan closing to verify if any new credit accounts were opened or if credit utilization increased. This is why it is always best to wait to open any new credit cards, obtain new loans, etc. until after the mortgage loan closes (as it can impact the qualifying Debt-to-Income ratio).

 

[jjrandorin]

As long as your mortgage closes before you switch your order to financed, that should be 100% fine. Your car financing application will reflect your new mortgage debt of course, however that's probably better than the other way around (better than financing a new car right before applying for a mortgage).

It's also fine to buy a car with cash, or make any large cash purchase, while applying for a mortgage IF AND ONLY IF the cash comes from an account you did NOT share as part of your mortgage application.

Cash purchases, as long as you still have enough in the account still for the funds you need to close the loan with, are fine from the same account(s) you provide to the lender. Underwriters will typically want document large deposits (not withdrawals), and the asset statements you provide at the time of a mortgage application usually don't expire for ~120 days.

Most lenders will order a "soft pull" credit report (without FICO/credit scores) within 7-10 days prior to the new loan closing to verify if any new credit accounts were opened or if credit utilization increased. This is why it is always best to wait to open any new credit cards, obtain new loans, etc. until after the mortgage loan closes (as it can impact the qualifying Debt-to-Income ratio).

All true, of course, but normally people in the circumstances described, are fairly familiar with what they can and cant do. For people unfamiliar with the particulars, its easier to make a blanket statement of "dont change anything" because thats easy to understand.

With that said, there are definitely "except for" exceptions, as you both have pointed out... but like I said, people who are in that category likely know those exceptions etc.

 

[CreoUCLA]

All true, of course, but normally people in the circumstances described, are fairly familiar with what they can and cant do. For people unfamiliar with the particulars, its easier to make a blanket statement of "dont change anything" because thats easy to understand.

With that said, there are definitely "except for" exceptions, as you both have pointed out... but like I said, people who are in that category likely know those exceptions etc.

You'd also be surprised how many people who are nearing the close of a new home purchase/refinance say, "But I'm going to be on vacation/out of town for the next 2 weeks..."

 

[boriszima]

when i refinanced my place, loan officer said, if you had to put in your social security for something, you are getting scammed or you will lose refinancing. I am no expert here. Above suggestions seems fine to buy with CASH and then switch if after December 10th.