Rent amount?

[kleahc]

Why would a mortgage lender ask what my rent payments are each month? She said she was comparing what I was paying now to what I would be paying with my mortgage.

Well, I have been living in a lower-rent place specifically to save money for a home purchase. My mortgage payment will of course be higher than what I am paying now (by about $250!) But that was something I understood to be part of the home-buying process! I could be living in a higher-rent place, but I chose to save for a house. Will I be punished for that because my mortgage will be higher than rent??

[meehan22]

I wouldn't think so as long as your DTI and everything else is fine.  

[TimeToRecover]

I will let the experts say but I know I was also asked my rent amount I think it is just one of the questions that are asked.  I think for some loans rent has to be verified.

[ezdriver]

There are underwriting guidelines that include tests for payment shock [as defined by government mortgage regs] so the question is a standard one. No biggie. Remember that some pay zero rent [living with parents?] and that is harder to explain when savings are also sparse.

[Legen_dary]

Interesting, none of the lenders I talked to asked me what my current rent was. But for the one I selected, I noticed on the GFE that they put an even number around 80% of my mortgage payment + taxes, etc.

[kleahc]

Help me sort this out, please? My rent is $875, my mortgage payment (including taxes & insurance) will run about $1,008. Will that cause a red flag for the mortgage lender?

[StartingOver10]

No. If your DTI with the new payment is fine you will be fine.

They are checking for payment shock. You calculate it by taking the new payment ($1008) and divide it by the old rent payment ($875) and it will give you the percentage increase. In your case its a 15% increase so no payment shock. There is no set number of which I am aware but it is one of the factors that the lender looks at for your overall file. Don't worry about it.

[kleahc]

Thanks. This is an item on the application I had never even thought of. I was told by my lender I had nothing to worry about, but come on. I am going to sleep very little until closing.

What else should I be loking out for? (I know- huge question.)