Question on back end DTI

pizza1 · ‎09-30-2015

I know on back end DTI, that it includes CC payments, school loans, personal loans, car loans, any loans...basically debt.

Is car insurance, electric, cell, food, etc..(basic living bills, not debts)...are these included? Sorry for the stupidity,but Ive never owned a home, or applied for a mortgage, but will be in the near future. Just trying to be a knowledgable as possible. Thx

Mouseman · ‎09-30-2015

Check http://www.bankrate.com/finance/mortgages/why-debt-to-income-matters-in-mortgages-1.aspx

Only money you OWE to a financial institution and which reports to a credit bureau. Of course, if you don't pay your cell phone or cable bill, it will got into collections and will affect your score - but neither one of those, nor supermarket/gas station/etc are considered for DTI.

Mouseman · ‎09-30-2015

Also - if you plan to apply for a mortgage:

* do your math first - as you are now, calculating your front-end and back-end ratio

* know your scores - all three, the MORTGAGE version of them

* reduce debt and overall credit utilization

* reduce inquiries (let old ones age out, don't go after new credit)

* season funds for down payment and closing costs

* start collecting paper - IRS tax returns, paychecks, bank statements, stock broker statements, etc.

* get ready to have a microscope shoved up your rear end by the lender. They WILL ask you for any and every scrap of paper they can think of. And they will ask for it twice or thrice. And then they will ask for more papers.

I used to think doing my taxes once a year sucked. Wait until you apply for a mortgage . . .

pizza1 · ‎09-30-2015

LOL!!! Thanks for your reply! Thank goodness I have awhile still to prepare! My car will be paid off by the time Im ready to apply for mortgage, and will only have a $100/mth student loan payment...thats it. I have no other debt.

Anonymous · ‎10-01-2015

@pizza1 wrote:
I know on back end DTI, that it includes CC payments, school loans, personal loans, car loans, any loans...basically debt.

Is car insurance, electric, cell, food, etc..(basic living bills, not debts)...are these included? Sorry for the stupidity,but Ive never owned a home, or applied for a mortgage, but will be in the near future. Just trying to be a knowledgable as possible. Thx

Nope!