@StartingOver10 wrote:
@Anonymous wrote:A few years ago I took out a unsecured signature loan of 3k. Montly payment 225. As of today the balance on the loan is 600 and some change and due to payoff in April.
I'm scheduled to close on April 30th. I'm sure they'll run another credit check in early April? My question concerns this loan and how it works with my DTI. I read somewhere on here a car note with less than 10 payments remaining is not figured in the mix. Would that be the case with this signature loan?
Will paying this off hurt or help me on the next credit pull? My guess I take a temporary hit, and in my situation better to just let it ride?
^^^That 10 payment rule varies by lender and in fact many lenders count the debt against your DTI up until it is actually paid off. Some lenders will drop it with six months remaining. You can not rely on this to occur at all. You will need to ask your particular lender how they handle the last few payments of an installment loan.
Do you have other installment loans reporting? If not, then you may see a small drop in your score if you pay it off early. I am only guessing based on the many posts in the auto section where the scores dropped temporarily when the loan was paid off. To be safe, you might just let it ride.
I'd been told the 10 payment rule doesn't exist period anymore as of 1-2 years ago, does it still vary some by lender? The few I talked to suggested it changed across the board and not just them admittedly that's to be taken with a grain of salt.
Anyway it's pretty clear from my perspective: if you're not clearing the DTI hurdle, then write the check; however, if you're fine on the DTI side, let it ride.
@Anonymous: softs can still have scores with them depending on what they're purchasing. Hard vs. Soft is just whether the inquiry gets lodged on your report or not.
@Anonymous wrote:If they don't like the loan with two payments left on it (?!?!) they will almost certainly simply tell you to pay it off at close. I can't imagine they are going to hold up a mortgage over what at that time will be 1 payment due for less than the full payment.
No, it isn't over 1 payment, using your example. A Chase LO explained to me that if you make application with the vehicle payment then the assumption is you will always have the vehicle payment; if not this payment then the next one you finance. If the payment affects your DTI then you will qualify for a lower mortgage.
If you make application and you have no payment the assumption is you won't ever have a payment.
Sounds strange to me - but that apparently is why they count the payment right up to the last one.
Shane, Dallas or any other underwriter or LO - please correct me if I misunderstood the LO's explanation.....
@StartingOver10 wrote:
@Anonymous wrote:If they don't like the loan with two payments left on it (?!?!) they will almost certainly simply tell you to pay it off at close. I can't imagine they are going to hold up a mortgage over what at that time will be 1 payment due for less than the full payment.
No, it isn't over 1 payment, using your example. A Chase LO explained to me that if you make application with the vehicle payment then the assumption is you will always have the vehicle payment; if not this payment then the next one you finance. If the payment affects your DTI then you will qualify for a lower mortgage.
If you make application and you have no payment the assumption is you won't ever have a payment.
Sounds strange to me - but that apparently is why they count the payment right up to the last one.
Shane, Dallas or any other underwriter or LO - please correct me if I misunderstood the LO's explanation.....
Im in the process of getting a USDA direct, and the lady handling mine said that my personal loan won't be used for calculating DTI, though they may make it a condition of closing that I pay it off. currently <4 payments left at 274.55/month which makes a significant difference in my DTI. I don't really care either way, I'm just letting it auto pay for the time being. Once I am approved I don't care if it is paid immediately, at closing or they just let it run. The money is there, so whatever makes them happy is fine with me.I cant imagine I would be closing til may at the earliest, so I will have 1 or 1.75 payments left.
@Peter1142 wrote:@Revelate: This might be true, but the point is the score is not relevant for qualification. The pre-closing pulls are not done to check scores, it is a manual review for any major changes to the file.
Please correct me if I'm mistaken, but we've had anecdotal stories of people's credit that's improved during their mortgage process affecting their rate, why wouldn't the reverse necessarily be true or are you assuming a rate lock period which I didn't think stood if there was a major change on a credit report?