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Mortgage & DTI

creditstalker
Frequent Contributor

Mortgage & DTI

I plan to purchase a house by the end of the year.   In order to reduce debt,  I have decided to sell my motorcycle that I currently have payments that consist of 432.00 per month,  and also I'm a co-signer on an auto loan that I plan to have myself removed from in order to lower my DTI....will this affect me getting a mortgage in 6 months?

Current FICO 08 as of 06/01/2015 TU 648 EQ 624 EX 602
FICO Mortgage Scores TU 594 EQ 540 EX 642

Message 1 of 10
9 REPLIES 9
StartingOver10
Moderator Emerita

Re: Mortgage & DTI


@creditstalker wrote:

I plan to purchase a house by the end of the year.   In order to reduce debt,  I have decided to sell my motorcycle that I currently have payments that consist of 432.00 per month,  and also I'm a co-signer on an auto loan that I plan to have myself removed from in order to lower my DTI....will this affect me getting a mortgage in 6 months?


It ought to really help your application due to reducing your DTI.

 

If you are referencing the score impact, it may affect your score temporarily to pay off two installment loans. Do you have other active installment loans now?

 

What are your mortgage scores? If you don't know, you can pull them here on myFICO under products (the 3 B report) to see where you are now.

Message 2 of 10
creditstalker
Frequent Contributor

Re: Mortgage & DTI


@StartingOver10 wrote:

@creditstalker wrote:

I plan to purchase a house by the end of the year.   In order to reduce debt,  I have decided to sell my motorcycle that I currently have payments that consist of 432.00 per month,  and also I'm a co-signer on an auto loan that I plan to have myself removed from in order to lower my DTI....will this affect me getting a mortgage in 6 months?


It ought to really help your application due to reducing your DTI.

 

If you are referencing the score impact, it may affect your score temporarily to pay off two installment loans. Do you have other active installment loans now?

 

What are your mortgage scores? If you don't know, you can pull them here on myFICO under products (the 3 B report) to see where you are now.


I have a total of 9 student loans (oldest account 2008) that are in deferrement until 2017.  My estimated student loan payments will be 320.00 per mo.

My current Mortgage Scores:

TU 605

EQ 550

EX 640

Current FICO 08 as of 06/01/2015 TU 648 EQ 624 EX 602
FICO Mortgage Scores TU 594 EQ 540 EX 642

Message 3 of 10
StartingOver10
Moderator Emerita

Re: Mortgage & DTI

Ok, your current mortgage mid score is 605.  You will probably need to boost that to at least 620 for an FHA loan and some lenders actually work with 640 mid score.

 

Do you have revolving accounts now (cc's)? If so, what are the credit lines and the balances? That is one of the quick ways to boost your score.

Message 4 of 10
creditstalker
Frequent Contributor

Re: Mortgage & DTI

 

 


StartingOver10 wrote:

Ok, your current mortgage mid score is 605.  You will probably need to boost that to at least 620 for an FHA loan and some lenders actually work with 640 mid score.

 

Do you have revolving accounts now (cc's)? If so, what are the credit lines and the balances? That is one of the quick ways to boost your score.


Yes, I have NFCU 3 credit cards and my score will go up once my report updates...I just paid them off :-)  So, I will get an increase once this is done!

 

 

My total balance is $1411, and my total credit limit is $1700.  I paid it down so that my UTI is at 5% 

 

NFCU $500

NFCU $500

NFCU $700

Current FICO 08 as of 06/01/2015 TU 648 EQ 624 EX 602
FICO Mortgage Scores TU 594 EQ 540 EX 642

Message 5 of 10
dpeezy
Valued Contributor

Re: Mortgage & DTI


@creditstalker wrote:

I plan to purchase a house by the end of the year.   In order to reduce debt,  I have decided to sell my motorcycle that I currently have payments that consist of 432.00 per month,  and also I'm a co-signer on an auto loan that I plan to have myself removed from in order to lower my DTI....will this affect me getting a mortgage in 6 months?


DTI will be based on the debts that are on the credit report at the time it is pulled.

 

Regarding the co-signed auto loan - if you can prove that the other party has made 100% of the payments for the past 12 months (via bank statements or cancelled checks), you may not have to count that against your DTI. With that being said, the co-signed debt must be counted against your DTI if you meet all three of the following: 1. you are doing an FHA loan, 2. the other person on the auto loan was your spouse, and 3. you live in a community property state.

Mortgage Loan Officer licensed in CA & AZ


Message 6 of 10
StartingOver10
Moderator Emerita

Re: Mortgage & DTI

Great!  That should give you a good boost.

 

Do you only have one cc?  I ask because some lenders have a 3 trade line requirement. You also have open student loans. Is there anything else? If not consider picking up one more card so you can show a min of 3 open accounts. You take a brief hit when you open an account, but you will see the scores bounce back up after 2 to 3 months and go even higher.

Message 7 of 10
creditstalker
Frequent Contributor

Re: Mortgage & DTI


@StartingOver10 wrote:

Great!  That should give you a good boost.

 

Do you only have one cc?  I ask because some lenders have a 3 trade line requirement. You also have open student loans. Is there anything else? If not consider picking up one more card so you can show a min of 3 open accounts. You take a brief hit when you open an account, but you will see the scores bounce back up after 2 to 3 months and go even higher.


Yes,  I have 3 credit cards with a total combined credit $1700.00.  I plan on applying for a FHA loan.  After I sell the motorcycle & remove my name as co-signer for auto loan.  I will only have student loan debt.  

 

Also,  I'm going through a divorce which won't be final until August or Sept 2015.  However, if I find a home that I like, how would I be able to exclude my ex from my new mortgage if the divorce isn't quite final?  Is there a form that we can sign that will state that he will have no interest in the property?  I live in Texas

Current FICO 08 as of 06/01/2015 TU 648 EQ 624 EX 602
FICO Mortgage Scores TU 594 EQ 540 EX 642

Message 8 of 10
StartingOver10
Moderator Emerita

Re: Mortgage & DTI


@creditstalker wrote:

@StartingOver10 wrote:

Great!  That should give you a good boost.

 

Do you only have one cc?  I ask because some lenders have a 3 trade line requirement. You also have open student loans. Is there anything else? If not consider picking up one more card so you can show a min of 3 open accounts. You take a brief hit when you open an account, but you will see the scores bounce back up after 2 to 3 months and go even higher.


Yes,  I have 3 credit cards with a total combined credit $1700.00.  I plan on applying for a FHA loan.  After I sell the motorcycle & remove my name as co-signer for auto loan.  I will only have student loan debt.  

 

Also,  I'm going through a divorce which won't be final until August or Sept 2015.  However, if I find a home that I like, how would I be able to exclude my ex from my new mortgage if the divorce isn't quite final?  Is there a form that we can sign that will state that he will have no interest in the property?  I live in Texas


Texas is a community property state. For your best asset protection, you will need to wait until the divorce is final. The lender will require a copy of your divorce decree and a copy of your Property Settlement Agreement (PSA).  Make sure the PSA is accurate and complete....so you don't end up with issues during your mortgage approval process.

Message 9 of 10
creditstalker
Frequent Contributor

Re: Mortgage & DTI

Oh okay,  I really appreciate the feedback :-)

Current FICO 08 as of 06/01/2015 TU 648 EQ 624 EX 602
FICO Mortgage Scores TU 594 EQ 540 EX 642

Message 10 of 10
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