DTI confusion, need clarification

[Anonymous]

Hi all, 

My wife and I are looking to buy when our recent lease is up in a year so we haven't spoken to a LO yet. 

We are hearing DTI basically takes your debt minimum payments including credit cards to calculate your DTI. 

We have our two car payments which I understand will be used to calculate DTI. We don't have any other actual debt. 

BUT we have placed small recurring charges on our various credit cards to keep them active. I.e. netflix on one, phone bill on the other, internet on the next etc... These are all set to pay in full every month. 

Are these going to count against as a "false" debt? Should we perhaps think about switching these over to deducting from our checking as we get closer to purchasing? 

Thanks!

[StarraeAday1]

Prior to a mortgage application, I would probably move all recurring charges to one card, and then pay that before the statement cuts. 

[Anonymous]

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@StarraeAday1 wrote:

Prior to a mortgage application, I would probably move all recurring charges to one card, and then pay that before the statement cuts. 

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This may be the safe bet then, better not to risk it. Thank you!

[skigirl916]

Yes. They will all count. Stop doing that. It's not really necessary. You only need to use a card every once in a while to keep it alive. Rotate them, but don't use all of them and carry balanced like that.

Why? Say you only have $25 balances on each of 5 cards. They each have a min payment. $25 min payments across 5 cards will count as $125 in debt towards your DTI.

As you move towards purchasing, pay those all off or use just one. A $125 balance on one card with a $25 min pay will reduce your debt for purposes of DTI in the above example by $100.