10 payments remaining...does it count for DTI?

[agekeith22]

I am sure this has been addressed, but seem to get conflicting answers when searching online.

My Husband pays $900 in child support per month. We have no other debt, besides our current mortgage, one CC, but we pay that off every month. I am trying to nail down a timeline for the purchase of our dream home, so would like to know if waiting to close when there is only 10 months of child support left would benefit us. Our plan is to take out a conventional loan with 10% down.

[CAnNY]

I thought anything 6 months or less did not have to be included. Hopefully someone knows for sure.

[Asailorshort]

I have seen where 10 payments or less remaining wont be included in your DTI. However, lenders can still include in your dti if the payment is a significant portion of your income. It is essentially the uw's discretion as to what is 'significant.' If you already have a lender(s) in mind, i would ask them about your specific situation. Its particularly interesting to see what their take would be regarding a child support bill, because, unlike paying off a car or personal loan, with child support its possible to have a new court order extending the payment period (ie child goes to/continues college).

[agekeith22]

I consider the $900 significant, but I would also consider $50 significant. My husband's income is $136k annually so the $900 is a fairly large percentage. The state we live is is pretty specific in regards to child support and there will be no extension of the child support, it ends when the child turns 18 or graduates high school, so fortunately we do not have to worry about it continuing after that. I will talk to our current lender, Wells Fargo, and let you know their take on it.

[StartingOver10]

You can talk to Wells Fargo, but I wouldn't go to them as a lender. They buy a huge amount of loans originated by other lenders and service them, but they are one of the worst when it comes to actually originating a loan. It's not the bank technically, its their process. Several years ago Wells went essentially to a "centralized processing" system (don't know the real name, just the process type). The dissadvantage is this:  the reps that take your application are very inexperienced and really have no idea of underwriting criteria. Since the LO's don't have experience you will get different answers to the same question and you won't know the real answer unless you go through the process. BOA is the same way.

You are better off going to a mortgage banker/correspondent lender to originate and fund your new loan. There is a good chance the loan will then be sold to Wells Fargo after it is funded anyway...lol. (That's how they end up being the largest servicer of mortgages).  The criteria for whether the $900 is waived or not because less than ten months is due is stricktly up to the guidelines of the lender you ultimately have fund the loan. Every lender has their own overlays. With a mortgage banker they have access to many lenders so they can actually taylor your loan package to meet the criteria of one of the lenders they sell to, but you will know right away at the beginning if the loan is going to meet their criteria. Rather than going all the way though the process and finding out at the end that you don't qualify or that you have to wait until the $900 is completely done before you apply.

As to DTI, if you are keeping your current home, then if you have a payment (including taxes, insurance and maintenance fees) it will count against you in your regular debt payments, if you have rental income the lender will usually use 75% of the income (not 100%) less your expenses if you have experience with rental property. If you have no prior rental property experience, then they may not use the income. This again is lender specific.

The best thing you can do is speak to a good LO with a correspondent lender/mortgage banker about your concerns so they can address each one individually for your specific situation.

[agekeith22]

Startingover10, yes, I was just going to contact WF since I already have a mortgage, however, I have gotten the feeling that the same question can have different answers depending on whom one talks to. WF did end up with our current loan due to the original lender selling it.

We have our current home for sale right now so starting the building process on a new home has to wait until our current home sells. I hate having this unknown variable, I feel like I can't plan appropriately. I feel like we can qualify for the home we want with the $900, but I am not 100% confident, however, if the $900 was excluded I would be 100% confident. I am a planner and like to be in control, with the home buying process I am at the mercy of the lender, and I hate it!

[cookiebird]

I am so sorry that I can't offer any insight about the child support but I do have to agree with you about not being able to plan.  I am a HUGE planner and I have my monthly budget drafting months in advance. Being in the middle of the mortgage process is driving me crazy that I can't "tweak" my budget yet since everything is in limbo. I hate feeling like I have no control over the situation.