CC minimums and mortgages

[34saving]

Has anybody calculated/thought about the impact of the new CC minumum payments on mortgage qualifications? (Isn't what you can qualify for based (at least a little) on your other debt payments?) Any ideas?

[PennyPincher]

To be honest, I don't think it will have any type of significant impact. Your debt is considered, but now your debt (in theory) will be paid off more quickly due to the jump in minimum payments. More of your money will be going toward the principal instead of the interest. But don't forget how many things mortgage companies look at ~ it's not just your monthly debt.

Some more info on the topic from an MSN article:

MBNA, Citibank and Bank of America are the first to raise the minimum monthly payment and other lenders are likely to follow. (From 2% to 4%)

Also, the new bankruptcy law requires that banks post a warning on their monthly statements, telling consumers how long it will take them to pay down their debt if they make only the minimum monthly payment.

Scary example: Take the $2,000 Hawaiian cruise you charged to a card with an 18% interest rate. If you faithfully make minimum payments and never add another dime to the balance, it'll still take you about 30 years to pay off the trip -- and you'll end up forking over almost $5,000 in interest. By making 4% minimum payments on the same debt, you'll finish up in 10 years, and your interest payments will be around $1,100. "It's a huge saving in time as well as interest," says Peterson.

A good thing: Another way increased minimums may cut debt is by forcing buyers who think in terms of monthly installments to take a second look at what they can afford. The new minimums will effectively double the monthly price of a purchase, turning a $40-a-month payment for a new sofa into an $80-a-month one. "People charge up to the point that they feel they have room within their budget to afford those payments," Peterson explains. "If I'm trying to figure my budget based around what my credit card payment is going to be, I'll be able to carry less debt."

[jhd815]

The new percentages could affect debt to income ratios that are used to qualify people for mortgages but only in the long term I think.

The ones who will suffer most are those who are already precariously balanced on high credit card balances and only able to afford the 2% minimum payments. This will double the amount they will have to pay monthly, a difficult proposal for those who are overextended and living paycheck to paycheck.

[Cautious Spender]

Perhaos it would be better if CC companies applied the 4% minimum to new purchases made after the new rule takes effect.