topic Re: Zeroing Out Housing Cost w/Credit Cards? in General Credit Topics

Zeroing Out Housing Cost w/Credit Cards?

PhilL — Mon, 09 Sep 2024 16:30:04 GMT

I have large balances across several credit cards.

I am in the process of moving home to consolidate costs.

For banks, what impact would setting the money housing cost to $0.00 in the income question section have on my relationship with them?

It's not going to cause something crazy like balence chasing or a financial review is it?

Re: Zeroing Out Housing Cost w/Credit Cards?

JoeRockhead — Mon, 09 Sep 2024 12:16:33 GMT

It would lower your DTI ratio which might be helpful when applying for new credit. Balance chasing generally occurs when lenders see you're carrying large balances and not making any meaningful progress in paying those balances down. Only paying the minimum would indicate finances are strained, or stretched too thin. The more high balances you carry on individual accounts, the more the chances for balance chasing goes up. Miss a payment, the chances are even greater.

Re: Zeroing Out Housing Cost w/Credit Cards?

pizzadude — Mon, 09 Sep 2024 14:28:22 GMT

Good points above, also will add that I'm not sure there's any real benefit gained by submitting $0 for your housing cost. I doubt it would materially affect your approval / credit limit.

Re: Zeroing Out Housing Cost w/Credit Cards?

NoHardLimits — Mon, 09 Sep 2024 20:15:25 GMT

The banks don't ask why your housing cost is zero. For me, I put zero housing costs on my credit card applications because I have no rent or mortgage payments. I own my primary residence free and clear. Zero housing costs allows me to have a debt-to-income ratio of only 1% which is extremely low risk from a credit underwriting point of view.

Re: Zeroing Out Housing Cost w/Credit Cards?

FicoMike0 — Wed, 11 Sep 2024 15:07:22 GMT

I don't quite get the op question. Reporting zero housing cost will only have a positive effect with you bank, why would you think otherwise?

Do you think they won't believe you? That's a different issue.

Re: Zeroing Out Housing Cost w/Credit Cards?

Snook_on_the_Line — Wed, 11 Sep 2024 23:57:48 GMT

@FicoMike0 wrote:
I don't quite get the op question. Reporting zero housing cost will only have a positive effect with you bank, why would you think otherwise?
Do you think they won't believe you? That's a different issue.

My housing cost is zero. But I always enter 355 which is the condo board fees that I pay monthly.

I do it Because the condo is in my gfs name and I feel like they won't believe me I put zero.

Re: Zeroing Out Housing Cost w/Credit Cards?

ptatohed — Thu, 12 Sep 2024 01:40:42 GMT

^^^

Yup, I think I have read a few times that people have had trouble with $0 so the recommendation is to just use a low number.

Re: Zeroing Out Housing Cost w/Credit Cards?

FicoMike0 — Thu, 12 Sep 2024 03:23:16 GMT

I always put zero. I own my house, it's the truth. Never been questioned. I suppose they have many pieces of info to consider. I've lived here forever. Had an account at the same local bank forever. Been registered to vote. My address is a single family house, there's no mortgage associated with the address. I'm old. I suppose if some of these facts were different, they might be suspicious.

As to the original question, the wells app feature that gives your dti explains that you are more likely to be approved for credit with a low dti. I suspect that I might get a little bigger cl for my income, due to a 1% dti. 99% of my income is disposable.

I also wonder if I fare better because my income sources are retirement derived. When I was working, I could lose my job. Not likely to lose sociable security and pension. My investments might tank, but not likely to zero either.

Re: Zeroing Out Housing Cost w/Credit Cards?

ptatohed — Thu, 12 Sep 2024 06:39:14 GMT

Are housing costs ever really $zero? Insurance, taxes, for some HOA?

Re: Zeroing Out Housing Cost w/Credit Cards?

FicoMike0 — Thu, 12 Sep 2024 18:52:50 GMT

@ptatohed

The question they ask is what you pay in rent or mortgage. They don't ask about taxes, insurance, hoanything or anything else.

Re: Zeroing Out Housing Cost w/Credit Cards?

ptatohed — Thu, 12 Sep 2024 19:13:42 GMT

@FicoMike0 wrote:
@ptatohed
The question they ask is what you pay in rent or mortgage. They don't ask about taxes, insurance, hoanything or anything else.

@FicoMike0

I guess, but it can get tricky. I have my taxes and insurance impounded in my mortgage payment which is $2k/mo. When I am asked my mortgage payment, I put down $2k, not just the P&I.

Re: Zeroing Out Housing Cost w/Credit Cards?

FicoMike0 — Thu, 12 Sep 2024 20:39:37 GMT

I've had that deal in the past too. I make the number as small as possible, without lieing. That's zero, these days.

Re: Zeroing Out Housing Cost w/Credit Cards?

Thomas_Thumb — Fri, 13 Sep 2024 14:29:15 GMT

My house is paid off.

However, I put down associated non discretionary obligations for property taxes and insurance which would average out at $700 per month.

Re: Zeroing Out Housing Cost w/Credit Cards?

FicoMike0 — Fri, 13 Sep 2024 04:08:41 GMT

I just answer truthfully. Zero.

Re: Zeroing Out Housing Cost w/Credit Cards?

KatzNDawgs — Sun, 15 Sep 2024 03:27:32 GMT

@ptatohed wrote:
I guess, but it can get tricky. I have my taxes and insurance impounded in my mortgage payment which is $2k/mo. When I am asked my mortgage payment, I put down $2k, not just the P&I.

Agree - with escrow (taxes/insurance) added in to mortgage payment along with P&I, that total is reported as monthly payment to CRAs from lender, so would be what I disclose also. HOA and other additional non-CRA stuff would not IMO be needed to be reported when asked.

Re: Zeroing Out Housing Cost w/Credit Cards?

FicoMike0 — Sun, 15 Sep 2024 18:36:09 GMT

To me it's simple. They ask what my mortgage payment is, I don't have one, it's zero. If I I put in my monthly averaged taxes and insurance, that's not the truth. It is the true answer to a different question, but so is any lie. If I had a mortgage that included taxes and ins, my payment amount would be the true answer. I might be tempted to back out taxes and ins to look better, but it would be untruthful, because that's not what they asked. I'm certainly not going to lie to make myself look worse!

Re: Zeroing Out Housing Cost w/Credit Cards?

FicoMike0 — Sun, 15 Sep 2024 18:39:03 GMT

Btw, don't you think zero is a beautiful number? It's not only even, it's the most even if all numbers. It's also one of the five fundamental constants of math.

Re: Zeroing Out Housing Cost w/Credit Cards?

Thomas_Thumb — Mon, 16 Sep 2024 01:33:09 GMT

I like complex numbers. Zero plays at being real and imaginary so, I don't trust it.

Re: Zeroing Out Housing Cost w/Credit Cards?

pizzadude — Sun, 15 Sep 2024 23:09:15 GMT

@FicoMike0 wrote:
Btw, don't you think zero is a beautiful number? It's not only even, it's the most even if all numbers. It's also one of the five fundamental constants of math.

What about NULL ? Although that might not qualify as an actual number

Re: Zeroing Out Housing Cost w/Credit Cards?

FicoMike0 — Tue, 17 Sep 2024 00:48:57 GMT

@Thomas_Thumb that's a great point, zero is as imaginary as it is real! Never thought of that. Here's some math trivia, what is the value of i^i ? It actually can be evaluated, it's = 0.20788...

It also can be shown to be not only irrational, but transcendental.