I am often asked, "Is it best to buy a new car before or after I buy my new house?"

If your goal is to refinance or purchase a home within the next 6-12 months, it is likely best to wait until after you close on your home before taking out any additional new loans, including but not limited to auto loans. New indebtedness may cause your credit scores to drop by lowering your average age of accounts, increasing your number of accounts with balances, and adding new hard inquiries to your credit report(s). Therefore, a new loan could have a negative impact upon your credit scores even if you are making all of the payments on time. 

Furthermore, the new loan may have an effect upon the size of home loan for which you can qualify as the new loan will likely have to be factored into your DTI (Debt to Income Ratio).  Simply put the new loan, whether car or any other type of financing, could lengthen your time frame before you would be eligible to purchase/refinance your home and would likely cause you to qualify for a smaller home loan amount than you would have previously. 

If you are considering trading in, refinancing, or buying a car it is probably best to wait until after you close on your new home loan to do so.