My lender told me my debt-to-income was too high for the rate I wanted

I was trying to pull out $85k for a kitchen reno and thought my credit score was all that mattered. The loan officer said my car payment and student loans pushed my DTI to 48%, which was a red flag for the best rates. I paid off my car early with some savings, got my DTI down to 36%, and locked in a way better deal. Has anyone else had to clean up other debts before their refi went through?

3 comments

3 Comments

gracewest24d ago

Totally get it, had a similar wake-up call. I was so focused on my credit score I forgot about the rest of my financial picture. My lender basically told me my budget looked like a cartoon where everything is on fire. Had to knock out a big personal loan I'd been ignoring before they'd even talk to me. It's a pain but makes sense when you think about it, they want to see you can actually handle the new payment.

the_grant24d ago

Did you ever check if paying off that loan actually hurt your credit score short-term?

harper_owens23d ago

Ugh, don't even get me started. My score dropped like 20 points after I paid off my car. Felt like getting fined for doing the right thing.