Applying for mortgage, and refinancing a car.

[Anonymous]

Our car payment is extremely high a big ol 450 a month. Due to pretty much no credit on my husbands part at time of app. If we refinance our car after paying on it for 6 months, and go to apply for an FHA home loan, 6 months prior, which would Feburuary/March by then how much would it effect our approval odds for our home loan?

[StartingOver10]

If your DTI is high(ish) than refinancing your vehicle loan to a much lower payment will help you, not hinder you.

One of the items that I see (as a Realtor) that hurts mortgae approvals is the DTI is too high for the mortgage the buyer requires in the purchase of a property they desire. Translation:  existing payments are too high dropping the amount of mortgage the buyer can obtain.

So, refi your vehicle loan to the best terms you can get and it will help you. Don't worry about the inq's. You will just have to write a short letter of explanation that you refi'ed your vehicle loan.

[Anonymous]

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@StartingOver10 wrote:

If your DTI is high(ish) than refinancing your vehicle low to a much lower payment will help you, not hinder you.

One of the items that I see (as a Realtor) that hurts mortgae approvals is the DTI is too high for the mortgage the buyer requires in the purchase of a property they desire. Translation:  existing payments are too high dropping the amount of mortgage the buyer can obtain.

So, refi your vehicle loan to the best terms you can get and it will help you. Don't worry about the inq's. You will just have to write a short letter of explanation that you refi'ed your vehicle loan.

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What I want to know when figuring your DTI, is that with average monthly bills such as internet, phone, cable, electric gas, ect or is it just credit cards and loan payments

[StartingOver10]

DTI is the new house payment (principal, interest, homeowners insurance, real estate taxes, mortgage insurance and HOA if applicable) plus your min payments on credit cards, vehicle loans, student loans (for some types of mortgages)

It does not include cable or auto insurance or utilities or phone bills

[Anonymous]

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@Anonymous wrote:

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@StartingOver10 wrote:

If your DTI is high(ish) than refinancing your vehicle low to a much lower payment will help you, not hinder you.

One of the items that I see (as a Realtor) that hurts mortgae approvals is the DTI is too high for the mortgage the buyer requires in the purchase of a property they desire. Translation:  existing payments are too high dropping the amount of mortgage the buyer can obtain.

So, refi your vehicle loan to the best terms you can get and it will help you. Don't worry about the inq's. You will just have to write a short letter of explanation that you refi'ed your vehicle loan.

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What I want to know when figuring your DTI, is that with average monthly bills such as internet, phone, cable, electric gas, ect or is it just credit cards and loan payments

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Only tradelines that appear on your credit report will count towards your DTI - student loans, auto/recreational loans, personal loans, mortgages, and minimum payments on credit cards. The only exceptions I can think of are child support or if you are on an IRS repayment plan, as those will both be factored into your DTI as well.