Some clients get a bit frustrated that minimum monthly credit card payments are counted against them in their debt ratios. They feel if they pay off their credit card bills every month no payment should be counted against them. First, the underwriter can’t assume that the client pays them off every month. Second, if you are spending about $3,000 every month on your credit cards for example, assume you usually pay that amount off every month. And the minimum monthly payments are $150 a month, but you pay off the balance each time. It seems pretty fair if you are spending $3,000 a month to only count $150 a month against you in your debt ratios.
Blog Category: debt ratios
Car loans and mortgages, do they affect one another? When a mortgage lender analyzes your finances to qualify you for a mortgage, they’re looking at all of your debt along with the new proposed mortgage payment. The other debts that they consider outside of your new mortgage payment are debts like minimum credit card payments, car loans, student loans, and any losses from other rental property. They do not look at debts like utility bill payments, car insurance or cell phone bills.