Monthly mortgage payment question?

[Anonymous]

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.

[SouthJamaica]

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@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.

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I think they mean principal and interest

[Anonymous]

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.

[iv]

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.)

[Anonymous]

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.

[Anonymous]

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.

[Anonymous]

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?

[tacpoly]

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. 

[Anonymous]

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. 

[Anonymous]

This article might interest you, BBS:

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