Apply for house mortgage during car lease

[chrishs2000]

This this this.

Don’t overextend yourself financially. If DTI is even a question, you’re overextended. Unless you’re doing a second home mortgage with intent to sell the first one.

[jeisensc]

@leakhash

Do lease and loan have smilar effects here? Is a lease also considered a “credit account”?

Yes

@leakhash

Do they pull my credit even for lease transfer?

Yes

@leakhash

Would one or two pulls matter if I’ve some headroom over the borderline of excellent score (let’s say 740).

You should still be fine.

You should check out The Credit Thread

The Credit Thread

Every month there is at least a handful of posts here that include erroneous perceptions, opinions or information about credit. This thread is intended to address questions and facilitate discussion about credit reporting, credit scoring, and any other general credit-related matters. All credit questions, and all informed opinions and answers, are welcome. To get the thread started, here are a couple of items that come up on LH from time to time. How does my income impact my credit score? I…

What the others said about DTI

[chrisgo]

You can’t really stop your life because of car lease so if it’s a good time to apply for a home mortgage (like right now), you have to do it. What they do not want to see is that you are trying to “hack your credit report” (meaning, you are making drastic moves). A good mortgage guy should be able to navigate through the different programs available and what different banks will “allow”. Right now, the rates are low but they are for “easy” loans – meaning you want to be as ordinary as possible. Having a car lease is fairly ordinary and a lease is better than a financed car – with a lease, the payments are lower and your total liability is lower. With a financed car (purchase), you can pay the whole thing off if you have the funds but otherwise, your monthly and total liability will be most likely higher (might be counteracted by the equity you have in your car but probably not too much help)

[leakhash]

Thanks for all your insights! Does anyone knows that: For a $40k-$60k car, if I do buyout to get out of lease early, how much more is it gonna cost compared to purchasing up front?

[spockvr6]

@leakhash

Do lease and loan have smilar effects here? Is a lease also considered a “credit account”?

When I checked mine, car leases showed on my credit report with a balance that represented the sum total of the remaining payments. So, if there are 10 payments of $200 remaining, on your credit report it will show as a $2,000 balance.

[Bostoncarconcierge]

It’s also very important to know that it depends on the leasing bank and how they handle this/how it affects your DTI.

I paid all the remaining payments on my Tundra lease through Ally. Ally effectively closed the account and the payment shows as 0 as far as DTI goes

I paid all of my remaining payments on my Jaguar lease through Chase. Chase will not do the same and it still shows as $517/month despite all remaining payments being made

I would have to do a lease return or pay the entire balance and buy the car for it to be gone.

All of the above was done by choice before I knew 100% I was buying a house, but when my mortgage broker did the credit pulls, I found this interesting.

[spockvr6]

This difference between leasing companies is interesting Mike. I will check mine and see how BMW FS and Toyota financial report a lease payoff.

[spockvr6]

@mllcb42

In my opinion, the dti limits most mortgage companies set are insanely high.

I would have thought that this might have been changed since the last financial crash, but I was also surprised at how high the DTI limits are. Way too high for my comfort level…But then again, I also don’t take on leases more than ~0.5% per month of MSRP either, so I am generally a wimp!

[Bostoncarconcierge]

Jag lease ends 6/1/21

They’ll send a letter saying all payments made but stays on credit report w $517.xx

[spockvr6]

And please, no one blast me for the % of MSRP metric, LOL.

[justsharing]

Few points,

Look for a mortgage you can “realistically” afford not what fits perfectly/snuggly in your budget.

Mortgage companies usually like 30-36% DTI so if you’re lease/loan is going to put you over that, you need to re-think the purchase. Do not over extend your self.

[trism]

@leakhash

• Do lease and loan have smilar effects here? Is a lease also considered a “credit account”?

• Would one or two pulls matter if I’ve some headroom over the borderline of excellent score (let’s say 740).

Car loans and car leases both report as installment accounts.

No.

[JPGR]

I think I would if my DTI was anywhere near 30%.

[Bostoncarconcierge]

Where do you live?

Limits near me are 45%

Someone get him a medic. MEDICCCCC!

[ctnyc]

I was floored when one LO I was working with said I can have a DTI of up to 49% and he could usually squeak loans through with 51% or 52% in some cases, especially with high score/clean applications like mine

[justsharing]

Definitely higher threshold in higher cost of living areas…

[justsharing]

At least it’s not pre-2008 lol

[spockvr6]

@Bostoncarconcierge

Someone get him a medic. MEDICCCCC!

[spockvr6]

@Bostoncarconcierge

Limits near me are 45%

I was told ~36-38% would fly in my area (Tampa, FL).

[Bismarck]

Depending on the lender, even if the full lease term is prepaid it may report as ongoing current payments on a liability on your credit report. There’s another, often overlooked piece – if you have an auto lease nearing lease term end on your credit, some mortgage lenders will factor in the payment even if you intend to return the car (logic being that you’d need to lease or buy another one).