Planning on buying a house in 4 months but...

[Anonymous]

Hi all and happy new years!

 My wife and I are planning on buying a house(first time) in about 4 months or maybe in the summer. But I have a couple of questions regarding credit cards and personal loans.

****  2 years ago I took a personal loan from ciitibank which as of now my debt is $1686 paying $183 monthly. 

**** I have a leased car(infinity) with payment of $575 which is about to expire in 2 months(march-2011) so I owe $1150

*****Macy's Store Credit cards $175, Amex $120 and that's it 

***** Fico score average 738  and make $85000 yearly

My questions is should I pay off the personal loan and the leased car in full before applying for a mortgage?

Does the mortgage lenders see that there are only 2 months left for my leased car and they won't count that when calculating my mortgage?

how bad is a personal loan when applying for a mortagage or buying a house? even if is a $1600 loan with $183 monthly payments and 11 months left

Thanks for all the replies!

[Lel]

It seems like the auto lease is a non-issue.  It will expire in 2 months and you're not planning on buying for 4 months or longer.

For your credit cards, is that your balance or your monthly payments?

The personal loan payment will be factored into your DTI calculation.  I think I vaguely recall one of the professionals here writing about how loans that are close to being paid might be treated differently, but I don't remember exactly how it works.  I also don't know whether personal loans are necessarily looked at as being negative, as long as it has always been paid on time.

[Anonymous]

personal loans are fine.  Certain types of in-house type financing are frowned upon, but that is more by FICO and credit card companies than mortgage companies.  ALl the mortgage company cares about in the respect is the payment history and the payment towards DTI.

As far as how they count loans, it depends.  Generally for them to totally ignore a loan for DTI purposes it has to be under I think $100 per month and be within 6 months or so of being paid off (I have seen 10 months, 6 months, 3 months...I think it is the underwriters choice).  That said, the lease will be gone in two months so unless you buy/lease a new car that is a non-issue.  The personal loan will be counted.  I would not pay any of it off early.  Keep the cash in savings and for reserves.  Ask any LO and they would rather have reserves to work with than a paid off account with less reserves.  The only exception is where credit card usage is high and that is affecting FICO score or where DTI is high and that is affecting DTI.  Even then, most LO's would rather you keep the accounts open and paid on time until that last minute and they can arrange to pay iff needed before close (that way you still have the open accounts.