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cashnocredit
Posts: 1,028
Registered: ‎07-18-2009
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Re: What is "credit card debt"?


bribro wrote:

In the eyes of an underwriter, "credit card debt" is whatever gets reported to the CRAs. If you're applying for a mortgage, zero out the statement balances on all your credit cards before you apply and they pull your credit. Even if you PIF and don't really consider yourself "in debt," mortgage underwriters will take those statement balances and assume you're making minimum payments. This can throw your debt-to-income ratios off.



Or at least zero out all but a few bucks on one card to maximize FICO which is by far the most critical determinant of the interest rate you would have to pay for a mortage.

I have reestablished credit over the last couple years
so my moniker is, well, rather out of date.

WM Discover $1800, WF Plat 12k, Chase Freedom Siggy15k, Amex Plat (60k H/B), Citi AA EWMC 25k
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bribro
Posts: 1,367
Registered: ‎04-20-2012
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Re: What is "credit card debt"?


cashnocredit wrote:

bribro wrote:

In the eyes of an underwriter, "credit card debt" is whatever gets reported to the CRAs. If you're applying for a mortgage, zero out the statement balances on all your credit cards before you apply and they pull your credit. Even if you PIF and don't really consider yourself "in debt," mortgage underwriters will take those statement balances and assume you're making minimum payments. This can throw your debt-to-income ratios off.



Or at least zero out all but a few bucks on one card to maximize FICO which is by far the most critical determinant of the interest rate you would have to pay for a mortage.


It depends on your lender. Some do not factor in credit scores at all when it comes to your rate; your score just has to be good enough to qualify (binary event). But yeah, it won't hurt to leave a small balance on one card if that actually helps your score.

TU FICO: 800 (2/1/14) | CK Score: 802 (2/1/14) | CS Score: 805 (2/1/14)

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Established Contributor
cashnocredit
Posts: 1,028
Registered: ‎07-18-2009
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Re: What is "credit card debt"?


bribro wrote:

cashnocredit wrote:

bribro wrote:

In the eyes of an underwriter, "credit card debt" is whatever gets reported to the CRAs. If you're applying for a mortgage, zero out the statement balances on all your credit cards before you apply and they pull your credit. Even if you PIF and don't really consider yourself "in debt," mortgage underwriters will take those statement balances and assume you're making minimum payments. This can throw your debt-to-income ratios off.



Or at least zero out all but a few bucks on one card to maximize FICO which is by far the most critical determinant of the interest rate you would have to pay for a mortage.


It depends on your lender. Some do not factor in credit scores at all when it comes to your rate; your score just has to be good enough to qualify (binary event). But yeah, it won't hurt to leave a small balance on one card if that actually helps your score.


There are some CCs with one tier interest rates and they are go/no go decisions but this is not the case with mortgages.

 

FICO scores are almost always used to establish interest rates on mortgages. The rest of your dox are critical for the "yes/no" as to whether you get a mortage. You can get mortgages with a 660 FICO or a 760 FICO but you will not get the same rates. A major reason FICO is so critical is that mortgages are almost always packaged as securitzed debts and the bonds are sold to institutions, pension funds, etc, as (relatively) safe investments. These are continuously monitored for FICO scores and the associated risk it what determines what the bonds pay or what their price is initially.

 

http://www.myfico.com/helpcenter/mortgages/buying_a_home.aspx

 

I have reestablished credit over the last couple years
so my moniker is, well, rather out of date.

WM Discover $1800, WF Plat 12k, Chase Freedom Siggy15k, Amex Plat (60k H/B), Citi AA EWMC 25k
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GatorGuy
Posts: 351
Registered: ‎06-02-2013
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Re: What is "credit card debt"?


cashnocredit wrote:

bribro wrote:

cashnocredit wrote:

bribro wrote:

In the eyes of an underwriter, "credit card debt" is whatever gets reported to the CRAs. If you're applying for a mortgage, zero out the statement balances on all your credit cards before you apply and they pull your credit. Even if you PIF and don't really consider yourself "in debt," mortgage underwriters will take those statement balances and assume you're making minimum payments. This can throw your debt-to-income ratios off.



Or at least zero out all but a few bucks on one card to maximize FICO which is by far the most critical determinant of the interest rate you would have to pay for a mortage.


It depends on your lender. Some do not factor in credit scores at all when it comes to your rate; your score just has to be good enough to qualify (binary event). But yeah, it won't hurt to leave a small balance on one card if that actually helps your score.


There are some CCs with one tier interest rates and they are go/no go decisions but this is not the case with mortgages.

 

FICO scores are almost always used to establish interest rates on mortgages. The rest of your dox are critical for the "yes/no" as to whether you get a mortage. You can get mortgages with a 660 FICO or a 760 FICO but you will not get the same rates. A major reason FICO is so critical is that mortgages are almost always packaged as securitzed debts and the bonds are sold to institutions, pension funds, etc, as (relatively) safe investments. These are continuously monitored for FICO scores and the associated risk it what determines what the bonds pay or what their price is initially.

 

http://www.myfico.com/helpcenter/mortgages/buying_a_home.aspx

 


I don't think he is saying that there is one rate for all but rather they bank will use the information from your credit report in their own algorithm to figure out your rate rather than your fico score.

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Revelate
Posts: 9,640
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Re: What is "credit card debt"?

[ Edited ]

GatorGuy wrote:

cashnocredit wrote:

bribro wrote:

cashnocredit wrote:

bribro wrote:

In the eyes of an underwriter, "credit card debt" is whatever gets reported to the CRAs. If you're applying for a mortgage, zero out the statement balances on all your credit cards before you apply and they pull your credit. Even if you PIF and don't really consider yourself "in debt," mortgage underwriters will take those statement balances and assume you're making minimum payments. This can throw your debt-to-income ratios off.



Or at least zero out all but a few bucks on one card to maximize FICO which is by far the most critical determinant of the interest rate you would have to pay for a mortage.


It depends on your lender. Some do not factor in credit scores at all when it comes to your rate; your score just has to be good enough to qualify (binary event). But yeah, it won't hurt to leave a small balance on one card if that actually helps your score.


There are some CCs with one tier interest rates and they are go/no go decisions but this is not the case with mortgages.

 

FICO scores are almost always used to establish interest rates on mortgages. The rest of your dox are critical for the "yes/no" as to whether you get a mortage. You can get mortgages with a 660 FICO or a 760 FICO but you will not get the same rates. A major reason FICO is so critical is that mortgages are almost always packaged as securitzed debts and the bonds are sold to institutions, pension funds, etc, as (relatively) safe investments. These are continuously monitored for FICO scores and the associated risk it what determines what the bonds pay or what their price is initially.

 

http://www.myfico.com/helpcenter/mortgages/buying_a_home.aspx

 


I don't think he is saying that there is one rate for all but rather they bank will use the information from your credit report in their own algorithm to figure out your rate rather than your fico score.


I'm by no means an expert and may well be missing something; however, as I understand it it's a two step process for conventional mortgages:

 

1) Your FICO score determines your base rate

2) You can buy down the rates (points) in exchange for upfront cash.

 

To my knowledge there isn't any other swag room (I think it's a flat rate for conventional) here at least on conventional or FHA mortgages.  Jumbo lending is a different animal altogether as those might be packaged up as secured debt and sold off, but it's not virtually guarunteed like conventional mortgages where it's a foregone conclusion it's going to be dumped on Fannie and Freddie... jumbo lending AFAIK the rate can vary with the size of the loan and likely a wealth of other factors too as bribro intimates.

 

 

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cashnocredit
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Re: What is "credit card debt"?

[ Edited ]

Revelate wrote:

GatorGuy wrote:

cashnocredit wrote:

bribro wrote:

cashnocredit wrote:

bribro wrote:

In the eyes of an underwriter, "credit card debt" is whatever gets reported to the CRAs. If you're applying for a mortgage, zero out the statement balances on all your credit cards before you apply and they pull your credit. Even if you PIF and don't really consider yourself "in debt," mortgage underwriters will take those statement balances and assume you're making minimum payments. This can throw your debt-to-income ratios off.



Or at least zero out all but a few bucks on one card to maximize FICO which is by far the most critical determinant of the interest rate you would have to pay for a mortage.


It depends on your lender. Some do not factor in credit scores at all when it comes to your rate; your score just has to be good enough to qualify (binary event). But yeah, it won't hurt to leave a small balance on one card if that actually helps your score.


There are some CCs with one tier interest rates and they are go/no go decisions but this is not the case with mortgages.

 

FICO scores are almost always used to establish interest rates on mortgages. The rest of your dox are critical for the "yes/no" as to whether you get a mortage. You can get mortgages with a 660 FICO or a 760 FICO but you will not get the same rates. A major reason FICO is so critical is that mortgages are almost always packaged as securitzed debts and the bonds are sold to institutions, pension funds, etc, as (relatively) safe investments. These are continuously monitored for FICO scores and the associated risk it what determines what the bonds pay or what their price is initially.

 

http://www.myfico.com/helpcenter/mortgages/buying_a_home.aspx

 


I don't think he is saying that there is one rate for all but rather they bank will use the information from your credit report in their own algorithm to figure out your rate rather than your fico score.


I'm by no means an expert and may well be missing something; however, as I understand it it's a two step process for conventional mortgages:

 

1) Your FICO score determines your base rate

2) You can buy down the rates (points) in exchange for upfront cash.

 

To my knowledge there isn't any other swag room (I think it's a flat rate for conventional) here at least on conventional or FHA mortgages.  Jumbo lending is a different animal altogether as those might be packaged up as secured debt and sold off, but it's not virtually guarunteed like conventional mortgages where it's a foregone conclusion it's going to be dumped on Fannie and Freddie... jumbo lending AFAIK the rate can vary with the size of the loan and likely a wealth of other factors too as bribro intimates.

 

 



Yeah, that's pretty much it. The underwriter will sell the mortgage to a GSA and is pretty much limited by FICO scores which are the holy grail for GSAs. However, the downpayment is also a factor in interest rates and whether a tack-on "insurance" fee is required which bumps interest rates when the down is less than 20%.

 

EtoA:

In any case it pays to zero all but one card before apping and get the overall util below10% or even 5% as that optimizes FICO scores in most cases as well as increases the max loan one is qualifed bey effectively eliminating the CC side of the debt.. Gotta play the game.

I have reestablished credit over the last couple years
so my moniker is, well, rather out of date.

WM Discover $1800, WF Plat 12k, Chase Freedom Siggy15k, Amex Plat (60k H/B), Citi AA EWMC 25k
Valued Contributor
bribro
Posts: 1,367
Registered: ‎04-20-2012
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Re: What is "credit card debt"?


cashnocredit wrote:

Revelate wrote:

GatorGuy wrote:

cashnocredit wrote:

bribro wrote:

cashnocredit wrote:

bribro wrote:

In the eyes of an underwriter, "credit card debt" is whatever gets reported to the CRAs. If you're applying for a mortgage, zero out the statement balances on all your credit cards before you apply and they pull your credit. Even if you PIF and don't really consider yourself "in debt," mortgage underwriters will take those statement balances and assume you're making minimum payments. This can throw your debt-to-income ratios off.



Or at least zero out all but a few bucks on one card to maximize FICO which is by far the most critical determinant of the interest rate you would have to pay for a mortage.


It depends on your lender. Some do not factor in credit scores at all when it comes to your rate; your score just has to be good enough to qualify (binary event). But yeah, it won't hurt to leave a small balance on one card if that actually helps your score.


There are some CCs with one tier interest rates and they are go/no go decisions but this is not the case with mortgages.

 

FICO scores are almost always used to establish interest rates on mortgages. The rest of your dox are critical for the "yes/no" as to whether you get a mortage. You can get mortgages with a 660 FICO or a 760 FICO but you will not get the same rates. A major reason FICO is so critical is that mortgages are almost always packaged as securitzed debts and the bonds are sold to institutions, pension funds, etc, as (relatively) safe investments. These are continuously monitored for FICO scores and the associated risk it what determines what the bonds pay or what their price is initially.

 

http://www.myfico.com/helpcenter/mortgages/buying_a_home.aspx

 


I don't think he is saying that there is one rate for all but rather they bank will use the information from your credit report in their own algorithm to figure out your rate rather than your fico score.


I'm by no means an expert and may well be missing something; however, as I understand it it's a two step process for conventional mortgages:

 

1) Your FICO score determines your base rate

2) You can buy down the rates (points) in exchange for upfront cash.

 

To my knowledge there isn't any other swag room (I think it's a flat rate for conventional) here at least on conventional or FHA mortgages.  Jumbo lending is a different animal altogether as those might be packaged up as secured debt and sold off, but it's not virtually guarunteed like conventional mortgages where it's a foregone conclusion it's going to be dumped on Fannie and Freddie... jumbo lending AFAIK the rate can vary with the size of the loan and likely a wealth of other factors too as bribro intimates.

 

 



Yeah, that's pretty much it. The underwriter will sell the mortgage to a GSA and is pretty much limited by FICO scores which are the holy grail for GSAs. However, the downpayment is also a factor in interest rates and whether a tack-on "insurance" fee is required which bumps interest rates when the down is less than 20%.

 

EtoA:

In any case it pays to zero all but one card before apping and get the overall util below10% or even 5% as that optimizes FICO scores in most cases as well as increases the max loan one is qualifed bey effectively eliminating the CC side of the debt.. Gotta play the game.


Like I said, it depends on the lender. For many portfolio lenders (especially those specializing in jumbo loans), your credit score has absolutely no bearing on your interest rate. You either qualify or you don't, and in many cases it's the LTV and DTI that are most important factors. For conforming loans however, your credit score is much more important.

TU FICO: 800 (2/1/14) | CK Score: 802 (2/1/14) | CS Score: 805 (2/1/14)

J.P. Morgan Palladium ($250k) | AmEx Platinum (NPSL) | AmEx SPG Personal/Business ($50k/$50k) | Citi Executive AAdvantage WEMC ($50k) | Citi Dividend WEMC ($50k) | Chase Sapphire Preferred VS ($50k) | Chase Ink Bold WEMC ($50k Flex) | Chase Ink Plus WEMC ($25k) | Chase Freedom VS ($25k) | Chase Freedom WMC ($25k) | Chase MileagePlus Explorer ($25k) | Chase Southwest RR Plus Business/Personal ($15k/$15k) | Barclays US Airways ($25k) | Barclays Hawaiian Airlines ($25k) | BofA Alaska Airlines ($10k) | Lexus Financial Services ($30k) | Mercedes-Benz Financial Services ($50k)
Established Contributor
cashnocredit
Posts: 1,028
Registered: ‎07-18-2009
0

Re: What is "credit card debt"?


bribro wrote:

cashnocredit wrote:

Yeah, that's pretty much it. The underwriter will sell the mortgage to a GSA and is pretty much limited by FICO scores which are the holy grail for GSAs. However, the downpayment is also a factor in interest rates and whether a tack-on "insurance" fee is required which bumps interest rates when the down is less than 20%.

EtoA:

In any case it pays to zero all but one card before apping and get the overall util below10% or even 5% as that optimizes FICO scores in most cases as well as increases the max loan one is qualifed bey effectively eliminating the CC side of the debt.. Gotta play the game.


Like I said, it depends on the lender. For many portfolio lenders (especially those specializing in jumbo loans), your credit score has absolutely no bearing on your interest rate. You either qualify or you don't, and in many cases it's the LTV and DTI that are most important factors. For conforming loans however, your credit score is much more important.


 

Agreed. I get solicitations every couple months from portfolio lenders in JPM, probably as a result of my Chase accounts. They are different critters specializing in non-conforming jumbos. They look at your investments, income streams and whatnot. I purchased my home outright and have no need for jumbos. A friend, who won the state lottery back in the 90's has been expanding her real estate portfolio ever since and she has had to use specialized lenders as well. She typically puts 50% down, borrows the rest so she has a net positive income stream from rentals. My investments run the gamut from super low risk treasuries to dabbliing in private equity which is high return high risk.

 

I also had made the mistake of not using credit for a very long time so when I started looking for CCs just to make life easier I had to start off with secured cards to get usable CLs. Not an issue now but it was interesting jumping into the CC world with everything looked at from the POV of your credit file. Mine was indistinguishable from someone living at home with a prepaid cell and zero credit experience.

 

Perhaps I should have pursued a card initially through my brokerage. I never investigated that though other than internet searches which turned up nada.

I have reestablished credit over the last couple years
so my moniker is, well, rather out of date.

WM Discover $1800, WF Plat 12k, Chase Freedom Siggy15k, Amex Plat (60k H/B), Citi AA EWMC 25k

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