36

All I can tell you is what I have experienced. Since paying off all of my debt, my credit score is the highest of my life, hovering just above 800. I have one open credit card. If I were in your shoes, I would keep one open credit card. I would use it for things where I don't really make a purchase decision, like paying for gasoline at the pump, or the ...


10

What should I do, in regards to filing taxes, to maximize my ability to get a mortgage? I would suggest that you not try to maximize your ability to get a mortgage and certainly not try to pay more taxes to overstate your income. Mortgage lending is already set up to allow one to borrow far more than is usually a good idea to borrow. The lender’s goal ...


9

TL;DR: It doesn't matter. At a point of sufficient credit score, your income is far more important, for loan approval, than your credit score. Apparently this was a big mistake because it caused my score to drop to 744 Not really, except for the questionability of opening a margin account. A credit score of 744 is sufficient for the best rates. ...


8

Let me use a reductio ad absurdum argument for a minute. (A special case of which is proof by contradiction.) Wikipedia summarizes reductio ad absurdum as a form of argument which attempts either to disprove a statement by showing it inevitably leads to a ridiculous, absurd, or impractical conclusion, or to prove one by showing that if it were not true, ...


8

You asked a few related questions: My question is - is a credit report actually the source of truth for debt to income calculations? Am I mistaken and instead the consumer is trusted to furnish accurate information? Does the underwriter or whomever actually call the owner of each debt that is listed to confirm the current amount and minimum payments? ...


6

There are 5 components to your credit score. Age of accounts. Just as it sounds, this is how old your accounts are. Paid off accounts can fall off your score and, in the case of a mortgage, likely make the average lower. Utilization. This is simply how much unsecured debt you have divided by your total credit limit. Payment history. How timely are ...


6

Yes. The old fashioned, well qualified loan would use D/I ratios of 28/36, 28% maximum on mortgage, property tax, and insurance, and 36% for that plus any other revolving debt. These numbers include the mortgage you are applying for.


6

There are several concerns with this plan: when you take out the home equity loan to pay off the student loan that portion of the debt will no longer be considered student loans. If your income drops for any reason that debt will not be eligible for income based repayment plan, or forgiveness programs for going into public service. Your debt will be ...


5

A 401(k) loan is not considered in your DTI ratio, as your 401(k) is an asset of yours, not money on loan from another source. While incredibly unwise to take a 401(k) loan out (see second paragraph for a litany of reasons that is by no means comprehensive), It is the equivalent of "Borrowing" funds from an existing account under your control (albeit with ...


5

It does, because it is a regular payment. If a lender is wise, they will view a 401K loan as riskier than other types of debt. An auto loan or credit card does not require a balloon payment when you change a job, but a 401K loan does. And people change jobs frequently.


5

We can't tell you what to do, just the consequences. Setting aside the issue of fraud, which is serious in its own right, if you under-report your expenses: You over-estimate your disposable income. This means that you might be considered for a loan that is above your real disposable income. You pay more tax, reducing your actual disposable income. This ...


4

Box 1 on your w2 is gross pay minus pre-tax deductions, like 401k (traditional 401ks, not Roth), so you are correct with that assumption. With that in mind, it was my experience that the bank only looked at gross pay from my previous two months of paychecks. Double check with a loan officer, but mortgage applications only take gross income into account so a ...


4

If you're thinking of buying a home, don't use your rent in the calculation. Use the expected mortgage payment (plus PMI, insurance and taxes). Also, while the $2000 is a debt, the bank only looks at the minimum payment (which in your case would be $40-$60). So, keep on using your CC, paying it off every month and living below your means. (Since the $...


3

Lenders are generally cautious about consumers that own income property which is mortgaged. This is based on the perception that such arrangements are very high risk - what happens if there's an issue with the rental property or it's mortgage that changes your finances to the point that you can no longer afford your newly-purchased primary residence? In part,...


3

There are actually two separate ratios to consider: Housing to income ratio: [Y]our future monthly housing expense, including principal, interest, taxes, insurance, and any housing association or condominium fees Debt to income ratio Total your monthly debt: Include minimum credit card payments, auto and student loans, consumer loans, and other financial ...


3

The generally accepted formula for maximizing your FICO score is 3 revolving accounts with only one reporting a small balance (~5% of the limit), one open installment account and one open mortgage account. Maintain that combination, with no late payments or other negatives and your score will quickly rise to 800+ Edit: changed "carrying" to "reporting" for ...


2

No. 1. you don't want to get a mortgage you can't service. 2. Getting a mortgage in the US of A is a borderline joke (pretty much if you can fog up a mirror, they give you a loan), unless you are of the wrong color then it might be a different kind of a joke (from what I hear)... Either case, fudging your expenses on your tax returns would be of marginal ...


2

Patience is the key here, I hate to say! There are five factors to FICO credit scores: payment history (35%) credit utilization (30%) length of credit history (15%) credit mix (10%) new credit (10%) Payment history is adversely affected by late payments - so always pay on time, otherwise your report will be haunted for seven years! 👻 Credit utilization ...


2

I can think of one short-term solution: lower your debt-to-credit ratio. Even if you pay off your credit card before the due date, the balance you owe is registered as a debt on your credit score for that statement period. If you pay off your balance before the statement period closes, the amount will be zero. Debt-to-credit ratio is one of highest impact ...


2

Patience has never been my strong suit Unfortunately this is what you need to build up credit. The activities that increase your credit score are paying your bills on time and not using too much of the available credit that you do have. The rest (age of accounts, recent pulls, etc.) are short-term indicators that indicate changes in behavior that will make ...


2

No it doesn't. Also, 401k contributions do not affect gross pay.


2

The rate used to qualify you is the initial rate. This can be a source of problems if the new rate jumps to a level that the borrowers can't afford. One problem during the last housing bubble was loans that were approved where the only reason they could afford the loan was because they initial payments were artificially low. When the loan reset to a normal ...


2

It's not a bad strategy. I'd rather owe money at 4% interest than at 6-7%. However, there is something to consider. Consolidating debt into a new loan can backfire. When you have money borrowed at 7%, you want to get that paid off as quickly as possible. Once you have that converted to 4%, if you think, "Now I can take my time paying off this debt," then ...


1

It sounds like you already know the answer to your question: doing what you're suggesting will get you the DTI you need to be approved for that particular mortgage. However, at the risk of offering advice you didn't ask for, I think there are a few caveats to this: In response to your comment above, a finance guy at a dealership is pretty much always going ...


1

Your question is based on a faulty assumption: Since debt-to-income ratio (dti) is an important factor in determining one's creditworthiness especially for mortgage rates,... Debt-to-income ratio is not directly related to one's credit worthiness, and also is not relevant for your credit score. For example, even someone with no income at all could still ...


1

This question is hard to answer because it depends on the mechanics of the credit reporting process, and the timing of that $2,000 hitting the credit card throughout the month. It's important to understand these mechanics in order to answer your question. Lenders report accounts to credit bureaus, including balance and minimum payment due. The balance ...


1

I spoke with a new construction mortgage specialist today. She told me that all debt, including current mortgage and the full payment of the permanent mortgage for the new construction, would be considered as debt. However, rental payments are considered temporary debt and not counted towards DTI. So to build a new home you must sell your current home and ...


1

For scoring purposes, having a DTI between 1-19% is ideal. From Credit Karma: That being said, depending on the loan type you looking at receiving (FHA, VA, Conventional, etc), there are certain max DTIs that you want to stay away from. As a rule, for VA, you want to try to stay away from 41% DTI. Exceptions are made for people with sufficient funds in ...


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