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No more 10 months left on installment loans = not counting?

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Revelate
Moderator Emeritus

No more 10 months left on installment loans = not counting?

Talked to a Chase mortgage guy today; when we were just talking shop and drawing up some numbers on my theoretical jumbo mortgage, he stated that for DTI purposes an installment loan with less than 10 months on it is still counted, and that was a recent change.

 

Not certain if that was Chase specific, or if that was wider, or if it was simply a function of jumbo loans or if the banker was just misinformed, but figured I'd ask the question here to see if others had heard similar recently or not.

 

In my case I'll just wind up writing a check (figuratively) for the remaining 2K on my car loan when push comes to shove on it and get that cleared out of the way for the calculation.  May do the same for my silly secured loan too, additional combined extra 400 not counted against me is non-trivial with the absurd Cali home prices.

 




        
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ShanetheMortgageMan
Super Contributor

Re: No more 10 months left on installment loans = not counting?

If this is a true jumbo program (loan amount over $625,500) then the lender makes up their own rules since it's a non-agency product.  With FHA/VA financing, installment loans (except for car leases) with 10 or less payments on them and a payment of less than $100 is excluded from the debt ratios pretty easily, however if it's $100 or larger and the underwriter thinks the payment will have an impact on the ability to repay the mortgage then it'll be inculded in the DTI.  Fannie/Freddie automated underwriting usually throws out any installment debt that 10 or less payments left (except for car leases) regardless of the payment amount.

Free Mortgage Advice & Pre-Approvals (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
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Message 2 of 3
Revelate
Moderator Emeritus

Re: No more 10 months left on installment loans = not counting?


@ShanetheMortgageMan wrote:

If this is a true jumbo program (loan amount over $625,500) then the lender makes up their own rules since it's a non-agency product.  With FHA/VA financing, installment loans (except for car leases) with 10 or less payments on them and a payment of less than $100 is excluded from the debt ratios pretty easily, however if it's $100 or larger and the underwriter thinks the payment will have an impact on the ability to repay the mortgage then it'll be inculded in the DTI.  Fannie/Freddie automated underwriting usually throws out any installment debt that 10 or less payments left (except for car leases) regardless of the payment amount.


Many thanks Shane!  Yes indeed, true jumbo program, have to love S. Cali.  Given that the amount left on the car note is something like 1% of the downpayment, if it's going to even possibly impact DTI it's better to just airstrike it from what you describe.  Not worth sacrificing it when everything is being done on the margin trying to get into a house by my fingernails without resetting the entire clock on my retirement.

 

Thanks again.

 

 




        
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