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Will paying off car lease improve DTI?

Ok so this is the situation: We (my husband and I) have been spending the past year fixing up our credit to buy a house. We initially planned to wait 2 years, but we have to move out of our rental because our landlord is in foreclosure.Our credit is in the high 600's. The only outstanding debt we have at this point (aside from carrying a 5-20 dollar balance on our CC's for activity) is an auto lease with about 5k left on it. WE got this lease when our credit was at its worst, and it has a very high payment to reflect this.When we figure out how much of a payment wed like to have on a mortgage our car lease puts us over 50% DTI, which makes it hard to get a loan in this market. What we would like to do is pay off the lease completely using $ from the downpayment. I have heard that car lease payoffs dont always reduce DTI, so i'm looking for advice.I'm not looking for peopel to tell me to wait an other year to buy.I don't have that luxury. Thanks!

Public Comments

1. If you no longer have that payment, your DTI will be reduced. However, that payment will have to be removed from your credit report and you may have to provide proof of total payment prior to closing on your home.