Dishonest pre-approval?

[Anonymous]

My hubands credit score is at 724 TU and will probably go up a few points after his next statement comes out saying he paid off a 4900 cc debt.  He bought a car the end of april ($528 mo payment) and it's still not reporting to credit reports. We have a 640 mo car payment that we will refi down to $400 per mo, a $124 cc payment per month, and a $432 cc payment for month. monthly income of $6723. with the $400 car payment (after refi), $528 car pay, $432 cc, and $124cc  will put us at 45% DTI, which may qualify us for a VA loan through USAA. My husband says he wants to get a pre-approval now because his car isn't yet reporting and our DTI would be 36%. I told him that USAA will find out we are paying another car payment when they look through our bank statements, and possibly cancel our loan beause we didn't state this in the beginning for pre-approval. Am I right in assumming that it would be a bad move to have them pull current credit report not showing loan and then find out about it later and cancel the loan? Any advice?

[ojefferyo]

Tell them everything in all honesty, that way you will not run into any issues down the line. 

[ezdriver]

You are correct. I hope that he listens to you.

Even if a debt does not show up on your credit reports, a mortgage applicant is legally obligated to disclose the debt. Also, not disclosing a known debt at preapproval time is stupid as a full application has to be subsequently completed, submitted and underwritten ... and the debt will be discovered.

Kudos to you for being so smart about this. All the best.

[Anonymous]

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@Anonymous wrote:

My hubands credit score is at 724 TU and will probably go up a few points after his next statement comes out saying he paid off a 4900 cc debt.  He bought a car the end of april ($528 mo payment) and it's still not reporting to credit reports. We have a 640 mo car payment that we will refi down to $400 per mo, a $124 cc payment per month, and a $432 cc payment for month. monthly income of $6723. with the $400 car payment (after refi), $528 car pay, $432 cc, and $124cc  will put us at 45% DTI, which may qualify us for a VA loan through USAA. My husband says he wants to get a pre-approval now because his car isn't yet reporting and our DTI would be 36%. I told him that USAA will find out we are paying another car payment when they look through our bank statements, and possibly cancel our loan beause we didn't state this in the beginning for pre-approval. Am I right in assumming that it would be a bad move to have them pull current credit report not showing loan and then find out about it later and cancel the loan? Any advice?

Honesty is the best policy. DTI ratios are meant to protect homebuyers from overextending themselves. If you still qualify to borrow the amount you are seeking even with the new car in your DTI, that's great. If not, you may have to pay down some debt or consider borrowing less for a home.

Your credit will be pulled again prior to closing, and your loan will be denied if the new car pushes your DTI past acceptable thresholds. I strongly recommend getting yourself pre-approved based on your actual income and accurate monthly debts.

[Anonymous]

Are you sure your DTI is correct? I got a different number, what else are you putting in? 

[Anonymous]

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@Anonymous wrote:

My hubands credit score is at 724 TU and will probably go up a few points after his next statement comes out saying he paid off a 4900 cc debt.  He bought a car the end of april ($528 mo payment) and it's still not reporting to credit reports. We have a 640 mo car payment that we will refi down to $400 per mo, a $124 cc payment per month, and a $432 cc payment for month. monthly income of $6723. with the $400 car payment (after refi), $528 car pay, $432 cc, and $124cc  will put us at 45% DTI, which may qualify us for a VA loan through USAA. My husband says he wants to get a pre-approval now because his car isn't yet reporting and our DTI would be 36%. I told him that USAA will find out we are paying another car payment when they look through our bank statements, and possibly cancel our loan beause we didn't state this in the beginning for pre-approval. Am I right in assumming that it would be a bad move to have them pull current credit report not showing loan and then find out about it later and cancel the loan? Any advice?

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Don't do that. Part of the application requires you to accurately report all current debt and requires you to sign it verifying that you have honestly and accurately reported all information. To intentionally omit that debt in order to artificially improve your DTI is mortgage fraud. Lie leads to lie as well. You're also going to have to sign another form explaining all credit inquires within the last 120 days and your auto application credit inquiry is going to be one of them, which means you'll have to lie AGAIN and say the inquiry did not lead to new credit. See where this is going?

And yes, USAA is certainly going to find out (this is not their first rodeo; and they've seen every trick in the book, trust me), and more likely than not, kick you right to the curb. Don't do it.

[Anonymous]

Yeah, I know it's better to be honest. We decided to wait a year and pay down cc debt. That will lower the DTI and make us more likely to get approved.

[StartingOver10]

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@Anonymous wrote:

Yeah, I know it's better to be honest. We decided to wait a year and pay down cc debt. That will lower the DTI and make us more likely to get approved.

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^^^Good decision. Buying a home is a large endeavor and when you are ready, the purchase is much easier. When you try to push it earlier, it can create a lot of stress. Get yourself into a good financial place (like you plan to) and it will be a much easier path.