Loan From DVC - Reveal Or Not Reveal?

[gppnj]

Hi, all.

I will mostly likely be applying for my first home mortgage soon. I have a question relating to that.

As most people know, although the credit inquiry DVC made when one first applied for a loan does show up on one's credit report, the actual loan from DVC does not unless one defaults on the loan. When I'm applying for my home mortgage, the amount I still owe to Disney will be counted as a debt. (In only a year, I've paid off much of what I owe to Disney, but I still owe some, and I won't be able to pay it off in full before I apply for the mortgage.) Overall, my level of debt is extremely low, so I don't know if my Disney debt would even make a difference, but I'm inclined not to take the chance.

When applying for my home mortage, I do know that I should reveal my Disney debt. However, if I choose not to, is there any way a potential lender can find out? If it's highly unlikely they could ever find out, I won't report it. However, if it's probable that they will find out about it, I might as well reveal it up front and not get caught in a fib.

I'd appreciate any advice, especially from people who were in this same situation.

Thanks.

 

[RobDoc]

There is always that chance. Why take a risk by falsifying your credit application - there are some pretty stiff penalties for such action in addition to the black mark on future requests for credit.

 

[Chuck S]

Is your monhly payment to Disney automatically taken from your account? If so, I don't think you could hide it very well. Plus, as you say, your debt to income ratio is low, so there is really no reason not to disclose it to your potential mortgage lender.

 

[wink13]

Many times mortgage lenders will ask you to explain recent inquires on your credit report. If you do not disclose your debt you can do one of two things. 1. Inform the lender of the current obligation or 2. inform the lender that you inquired about credit but declined.

I agree with WebmasterDoc. Why take the chance???

Good luck with your home purchase.

 

[vinnie_a72]

I know in texas, and I am pretty sure most other places that debt shows 10 or less remaining payments does not count against you. I just purchased a home and my auto payment was not used against me because at the time I only owed 4 more payments. You should not have nothing to hide if you owe 10 payments or less. talk to your mortgage rep, they will have the best advice for you.
vince

 

[gppnj]

There is always that chance. Why take a risk by falsifying your credit application - there are some pretty stiff penalties for such action in addition to the black mark on future requests for credit.

Would there be a penalty beyond denying the application? Is there some sort of blacklist or something? Just wondering.

 

[Doctor P]

Would there be a penalty beyond denying the application? Is there some sort of blacklist or something? Just wondering.

It's fraud, so there could actually be criminal penalties if you got the loan and they found out later that you had not been truthful on your application. Is it likely? Probably not, but it is not a chance I personally would be willing to take.

 

[gppnj]

It's fraud, so there could actually be criminal penalties if you got the loan and they found out later that you had not been truthful on your application. Is it likely? Probably not, but it is not a chance I personally would be willing to take.

I see. Thanks. I wouldn't really worry about charges. You say fraud, I say oversight. But I agree that it's best not to risk it.

 

[jgreenedc]

I would echo the comments of the others - don't take the chance. Essentially you would be falsifying a loan application when you sign saying that eveything on it is true to the best of your knowledge. If lightning strikes and you get caught it could follow you a long time in ways you cannot even imagine now.

And if you're applying for an FHA loan, don't even think about it because then you're messing with the feds. It's possible that some of the loan apps may be governed by federal law anyway, but FHA definitely would be.

On the flip side - make sure you list the points as an asset, because they are. From what you say, you could sell them tomorrow and probably pay off the loan. Now, that won't help debt-to-income but lenders do like to see assets.

 

[Doctor P]

I would echo the comments of the others - don't take the chance. Essentially you would be falsifying a loan application when you sign saying that eveything on it is true to the best of your knowledge. If lightning strikes and you get caught it could follow you a long time in ways you cannot even imagine now.

And if you're applying for an FHA loan, don't even think about it because then you're messing with the feds. It's possible that some of the loan apps may be governed by federal law anyway, but FHA definitely would be.

On the flip side - make sure you list the points as an asset, because they are. From what you say, you could sell them tomorrow and probably pay off the loan. Now, that won't help debt-to-income but lenders do like to see assets.

Actually, if I am not mistaken, you are not supposed to list it as an asset. For loan origination purposes, timeshares are excluded from being counted as assets as I recall. Doesn't hurt to list it, but it won't count for anything (believe it or not).

 

[salmoneous]

Slightly different prospective - as long as your credit is decent, banks are extremely generous when it comes to the amount of debt they will allow you to carry. In all honestly, if disclosing the DVC loan would cause your loan to be rejected, you are better off having the loan rejected.

Disclose it.

 

[gppnj]

Slightly different prospective - as long as your credit is decent, banks are extremely generous when it comes to the amount of debt they will allow you to carry. In all honestly, if disclosing the DVC loan would cause your loan to be rejected, you are better off having the loan rejected.

Disclose it.

Good point.

 

[CarolMN]

If you don't have a lot of other debt or a long history of paying your bills on time, the DVC loan might actually help you (via a better credit score) to get a lower interest rate on your mortgage.

Best wishes -

 

[Doctor P]

If you don't have a lot of other debt or a long history of paying your bills on time, the DVC loan might actually help you (via a better credit score) to get a lower interest rate on your mortgage.

Best wishes -

Actually, it is highly unlikely that DVC will affect anyone's credit score, positive or negative, since the lender purchases the credit score (typically). Since DVC is not reported, it won't show up on any of those credit scores. Very few lenders have the ability to independently calculate a score, nor the software necessary to do so (trust me, the calculation is quite complex and proprietary).

 

[gppnj]

Actually, it is highly unlikely that DVC will affect anyone's credit score, positive or negative, since the lender purchases the credit score (typically). Since DVC is not reported, it won't show up on any of those credit scores. Very few lenders have the ability to independently calculate a score, nor the software necessary to do so (trust me, the calculation is quite complex and proprietary).

Right. That's the bad part about DVC not appearing on one's score: If one pays DVC on time, it won't benefit the credit score. It can't affect the score if it never gets reported to the credit bureaus. As I said in my first post, I've consistently heard that the only time it gets reported is if one is habitually late or defaults, and in that case, it definitely won't benefit the score.

 

[gppnj]

But anyway, thanks to everyone for their responses. I've decided I will report it. The money I owe to Disney is literally my only debt, so I can't imagine it having any impact.

Also, I remember someone once saying that they had head of someone who answered on her application that she had never declared bankruptcy. She actually had, but she knew it was no longer on her credit report, so she figured she could get away with saying no. They found out she did, and they denied her the loan - even though she would have qualified if she had said yes. I wouldn't want the equivalent to happen to me.

 

[pilferk]

Not to mention....

If they didn't find out, approved you for your mortgage, and then found out at a later date that you'd falsified the loan app, they could call your mortgage.

Definitely not worth risking losing your (new) house over.

 

[Beth]

Actually, if I am not mistaken, you are not supposed to list it as an asset. For loan origination purposes, timeshares are excluded from being counted as assets as I recall. Doesn't hurt to list it, but it won't count for anything (believe it or not).

Doctor P

Just curious where you've heard this... I work for a bank, and I've seen MANY timeshares listed on financial statements. I've got my own on mine... I'd drop it off if this were really true...

Is this a Bank policy that you've heard, or something else?

...Not trying to be argumentative - just truly curious.

Thanks!

 

[TammyAlphabet]

I just moved into my new home and I just got a home loan. The loan agent used my credit report to list my debts and payments and I completely forgot about the DVC not being on there. So I guess it wasn't on there. Anyhow, it wouldn't have made any difference in whether the loan was approved. Come to think of it, it is listed as a debit on my bank statements, as well as my annual dues. Maybe they were on there. Now I wonder if I should be worried?

 

[Doctor P]

Doctor P

Just curious where you've heard this... I work for a bank, and I've seen MANY timeshares listed on financial statements. I've got my own on mine... I'd drop it off if this were really true...

Is this a Bank policy that you've heard, or something else?

...Not trying to be argumentative - just truly curious.

Thanks!

I'm trying to remember where I saw this (and then confirmed it), but I can't get the specific reference off the top of my head. I believe it was in the loan origination training for loan officers at the financial institution where I was chairman of the board (they had guidance from the professional associations and regulators as to how to put things into the system as at that time they did independent ratio calculations for loan qualification). I can tell you that the basic reasoning is that a timeshare cannot be objectively valued as an asset (DVC is somewhat of an exception, but even with DVC it would be hard to value the asset). There is no "blue book" or appraisal available for timeshares, so the choice has been to exclude them from calculations (at least based on what I know from my experience).