topic Re: Monthly mortgage payment question? in General Credit Topics

Monthly mortgage payment question?

Anonymous — Sat, 07 Jan 2017 17:49:07 GMT

So on a lot of CC applications you are asked what your monthly rent or mortgage payment is.

When it comes to mortgage payment, are they just looking for principle and interest or if you escrow your taxes and lump them into the payment is that also included?

I sort of view the taxes as different; one could choose to pay their taxes in full once per year and if that's the case it wouldn't be included in their mortgage payment. Hopefully I'm not overthinking this. Taxes often can be as much as the principle and interest so whether or not this amount is included could be significant in that someone could be declaring a $800/mo payment verses a $1600/mo payment, for example.

Re: Monthly mortgage payment question?

SouthJamaica — Sat, 07 Jan 2017 18:07:51 GMT

@Anonymous wrote:
So on a lot of CC applications you are asked what your monthly rent or mortgage payment is.

When it comes to mortgage payment, are they just looking for principle and interest or if you escrow your taxes and lump them into the payment is that also included?

I sort of view the taxes as different; one could choose to pay their taxes in full once per year and if that's the case it wouldn't be included in their mortgage payment. Hopefully I'm not overthinking this. Taxes often can be as much as the principle and interest so whether or not this amount is included could be significant in that someone could be declaring a $800/mo payment verses a $1600/mo payment, for example.

I think they mean principal and interest

Re: Monthly mortgage payment question?

Anonymous — Sat, 07 Jan 2017 18:23:37 GMT

That's sort of what I was thinking. I'm going to go ahead and change/update this with my CC accounts now since I've had the escrow amount included in there which inflates my actual mortgage payment considerably. I have no way of quantifying how much that has held back (or will help) my accounts by declaring quite a bit less in terms of my highest monthly expense, but we'll see.

Re: Monthly mortgage payment question?

iv — Sat, 07 Jan 2017 21:04:36 GMT

Your housing cost (for non-renters) is mortgage/insurance/taxes... doesn't matter if it's in escrow, paid quarterly, or paid annually - I always report the whole amount.

I'll also point out, that if you are paying them via escrow, that total monthly amount is what appears on your credit report... and could be checked for verification (if the lender bothered to do so).

But do as you wish... as you know, such things are rarely checked, unless they appear to be wildly unlikely. (Reporting $0 tends to look odd, as does reporting higher monthly housing costs than monthly income.)

Re: Monthly mortgage payment question?

Anonymous — Sun, 08 Jan 2017 06:42:17 GMT

Interesting. It would be nice if this were clarified when asked for your mortgage/rent payment. If I didn't lump my taxes into my monthly payment, I would have never even considered adding them in. Good point about that payment amount being able to be verified on the credit report if anyone cared to look.

I guess those numbers can be a little tricky sometimes. For example, in about a year I plan on moving and possibly renting out my current house. The rent would wash the mortgage payment, but on paper from a UW review it would still look like that mortgage payment is an expense and depending on how the rent is collected, I may not be able to show it / include it as income. There are probably a million different odd situations such as this that can make it difficult to decide which numbers to disclose for account purposes.

Re: Monthly mortgage payment question?

Anonymous — Sun, 08 Jan 2017 07:04:23 GMT

Another reason to report the full amount is that this is what someone does who's renting. There are in fact property taxes that have to be paid on the building and land that you are renting. Your rent incorporates that amount. If a renter takes a chunk of that monthly figure off, based on his assessment that the CC issuer really doesn't want that bit included in your application for a card, he'll discover that Chase or BOA or Wells Fargo (and their lawyers) will take a very dim view of his arguments. (Especially since he could have just given them a call and asked them, which he almost certainly did not do.)

But of course, as iv observes, they may never find out.

Re: Monthly mortgage payment question?

Anonymous — Sun, 08 Jan 2017 08:50:33 GMT

I think it would make more sense if creditors asked for something a big more general, such as "total monthly bills" or "total monthly expenses" - something along those lines. Mortgage/rent payment is just super vague and can make up dramatically different percentages of overall bills.

You can have 1 person with a $800/mo mortgage/rent payment that's got 2 car loans that combined equal that mortgage/rent payment, so $1600/mo in installment payments. Then you can have another person with a $1000/mo mortgage/rent payment that drives a car that's paid off and has no installment loans. Since only mortgage/rent payment is asked for, it appears that the first person is in a better position (assuming equal income) but obviously that isn't the case. Of couse, upon UW one would be able to see the auto loans, I get that.

I would say something similar to including taxes into the mortgage payment would be what's included with a rent payment. Some rent is just rent. Others include heat/hot water. Some include electric. Some include cable. Same deal as the above example with the auto loan(s), you have two individuals with identical income, one has a rent payment of $800/mo and the other $1100/mo. The $1100/mo includes heat/hot water, electric and cable. The fist person pays those categories out of pocket which when added together lands somewhere around what the second person pays for those things "included" in the rent payment. Theoretically these two individuals have the same expenses with respect to this category, but when declaring "mortgage or rent payment" to a creditor one is giving an amount $300 above the other.

It would just seem to me that wording it such that it was "average monthly expenses" and then giving a list of what should be included would create a more level playing field and give a better overall representation of one's monthly financial snapshot. Any thoughts on this?

Re: Monthly mortgage payment question?

tacpoly — Sun, 08 Jan 2017 14:15:47 GMT

You're overthinking things. For housing expense, put down the total cost of housing for you: that includes taxes if you are obligated to pay taxes. Because, guess what, that comes out of your wallet and is not available for paying cc bills.

As for why they don't ask for other expenses, maybe because other costs tend to fluctuate and can easily be abandoned. I don't know.

If you are being denied higher cc limits because your income isn't high enough, perhaps consider those issuers who are less income sensitive. Eventually they'll all fall in line anyway.

Re: Monthly mortgage payment question?

Anonymous — Mon, 09 Jan 2017 02:18:15 GMT

I'm not being denied anything, I just got to thinking about this.

I still maintain that asking "monthly expenses" is more meaningful than a monthly rent/mortgage payment.

Say you have a couple that lives together and one of them pays the rent while the other pays all of the other expenses. One of these individuals could answer $0 to the rent/mortgage payment field while the other answers $800 (or whatever) when if the question were posed as "monthly expenses" neither would give an answer of $0 and more than likely both would come up with similar amounts.

Yes costs can fluctuate, but in general I think most people have monthly expenses that stay relatively constant. Sure you may pay off a car loan or something that could change the number a significant amount, but it literally takes 30 seconds to update this with any creditor.

I don't know, total monthly expenses simply seems like a more meaningful number to me.

Re: Monthly mortgage payment question?

Anonymous — Mon, 09 Jan 2017 02:47:30 GMT

This article might interest you, BBS:

https://www.savvyoncredit.com/credit-card-applications-rent-own/

Re: Monthly mortgage payment question?

Anonymous — Mon, 09 Jan 2017 13:34:36 GMT

Thanks for the link, CGID. Unfortunately the article doesn't touch specifically on the subject of taxes and how they should be considered with respect to monthly mortgage payment. It does however suggest that lenders would expect one to disclose a monthly mortgage payment that matches what could be seen when reviewing a credit report. This, to me, suggests that if you taxes are lumped into your mortgage payment [can be seen on credit report as part of the monthly payment] that they this full amount should be disclosed when asked for your monthly housing payment. It also then suggests, however, that if your taxes are NOT included in this payment that they shouldn't be disclosed at this time as you would be providing your creditor with a number that doesn't closely match what they would find upon manual review of your credit report. Perhaps this article generates more questions than answers... lol. Not a bad thing, though.

The article also clearly states when talking about rent payment inquiry that one of the main reasons for asking is to determine cash flow and expense relative to income... which sort of stengthens my viewpoint earlier in this thread that inquring about total monthly expenses would be a far more meaningful number than simply one slice of the pie, that being monthly rent/housing payment.

Re: Monthly mortgage payment question?

Revelate — Mon, 09 Jan 2017 16:19:15 GMT

I just put my flat mortgage payment + HOA. I don't escrow personally, nor would I ever actually in the current market (where escrow vs. not was no penalty for every lender I talked to and that was a bunch).

I'm 99% confident lenders will impute things like taxes and what not, they do for gross income and besides the overwhelming majority of people are just going to list their monthly payment regardless.

Kinda overthinking it as someone said .

Re: Monthly mortgage payment question?

Anonymous — Tue, 10 Jan 2017 01:19:33 GMT

I agree that I could very well be overthinking the inclusion or exclusion of taxes into mortgage payment, but I don't think I'm overthinking the topic of total monthly expenses as opposed to just 1 expense that lenders consider.

Re: Monthly mortgage payment question?

grillandwinemaster — Tue, 10 Jan 2017 03:16:52 GMT

I think part of the reason that BBS has posed this question regarding property taxes is because he happens to live in New York state where property taxes are stratospherically out of control.

Some property tax bills in NY can equal 100% of the actual mortgage payment. In this case, based on percentages, reporting the property tax payment can be a significant portion of ones debt to income ratio obligations.

For the rest of us that pay a more conservative property tax rate, the difference is inconsequential.

BBS, I have a solution for you, move out of the state of NY! I'm in California, which is not exactly property tax or tax friendly in general. However, it's no where near the New York state level.

So many of my customers have literally sold there homes and moved to a more tax friendly state.

Just my 2 cents on the topic...

Re: Monthly mortgage payment question?

Revelate — Tue, 10 Jan 2017 04:42:54 GMT

Banks have so much flexibility wheni t comes to limits vs. income not sure it's relevant.

NY and Cali have different laws, and Cali property taxes are so FUBAR anyway there's just going to be some blanket assumption based on where you live what you property tax is going to be and that will be used.

Like mentioned re: mortgage space, lenders know you pay taxes, they factor that in, and while I haven't seen most of the lenders' algortihms it's a reasonable bet that they do here... various state tax rates are well known.

Re: Monthly mortgage payment question?

tacpoly — Tue, 10 Jan 2017 05:56:43 GMT

@grillandwinemaster wrote:
I think part of the reason that BBS has posed this question regarding property taxes is because he happens to live in New York state where property taxes are stratospherically out of control.

Some property tax bills in NY can equal 100% of the actual mortgage payment. In this case, based on percentages, reporting the property tax payment can be a significant portion of ones debt to income ratio obligations...

Not all of NY state have high property taxes. NYC has relatively low property taxes -- you just have to be able to afford property there.

Re: Monthly mortgage payment question?

Anonymous — Tue, 10 Jan 2017 13:01:23 GMT

NY taxes are certainly not cheap, I agree with that 100%. The cost of living living is through the roof and questions are often raised as to whether or not a move out of the state should be considered.

The more we discuss this topic, the more I find the whole rent/mortgage payment question irrelevant. As mentioned earlier, lenders can see what your monthly mortgage payment is from looking at your credit report... so asking what it is more or less is just a way of determining if you're the type of person to give a truthful answer. It's kind funny when you think about it. They are asking you a question to which they already know the answer, and they know that you know they know the answer

Rent I guess I understand as that can't be seen from looking at your credit report, but neither can any other non-installment loan expenses so if that's the case what's the point in just asking for one. I just feel a question such as this should be more of an all or nothing type of thing. Either don't ask it at all, or if you're going to ask it attempt to achieve as much useful data out of it as possible.

Re: Monthly mortgage payment question?

iced — Tue, 10 Jan 2017 14:35:52 GMT

@Anonymous wrote:
So on a lot of CC applications you are asked what your monthly rent or mortgage payment is.

When it comes to mortgage payment, are they just looking for principle and interest or if you escrow your taxes and lump them into the payment is that also included?

I sort of view the taxes as different; one could choose to pay their taxes in full once per year and if that's the case it wouldn't be included in their mortgage payment. Hopefully I'm not overthinking this. Taxes often can be as much as the principle and interest so whether or not this amount is included could be significant in that someone could be declaring a $800/mo payment verses a $1600/mo payment, for example.

I like to error on the side of conservative and I usually provide P&I, taxes, parking, and HOA combined as my "payment".

Re: Monthly mortgage payment question?

Anonymous — Tue, 10 Jan 2017 21:24:16 GMT

Perhaps monthly mortgage/rent payment isn't a very big factor that is considered by lenders. At least not big in terms of what you enter in manually when asked that question. I would think the "income" field carries far more weight.

Re: Monthly mortgage payment question?

Revelate — Tue, 10 Jan 2017 23:12:59 GMT

@Anonymous wrote:
Perhaps monthly mortgage/rent payment isn't a very big factor that is considered by lenders. At least not big in terms of what you enter in manually when asked that question. I would think the "income" field carries far more weight.

More likely tied together.

Income - mandatory spend = consumer discretionary spend = potential profit!