Featured News 2016 Debt and Qualifying for a Mortgage

Debt and Qualifying for a Mortgage

If you're buying a home, your credit score will be a big factor, and the amount of debt that you have. Before you submit an offer on that dream home, consider the types of debts that you have and your income.

There are secured debts and unsecured debts. When you take out an auto loan, the bank can repossess the vehicle if you fail to pay the loan. This is called "secured" debt because the loan is secured by a vehicle, which the bank can take back to recoup its costs if you fail to keep up with the payments.

Unsecured debts, such as student loans, are not backed by anything, and cannot be taken back. Here are key types of consumer loans, which affect your ability to get a mortgage differently.

Debts and Securing a Home Loan

Student loans and credit cards are unsecured debts that can help boost your credit score. Since student loans can take decades to pay back, they can help raise your FICO score, especially because you're paying them over a long period of time.

Be careful, if you have a large student loan, it can affect your debt-to-income ratio, and your ability to qualify for a home loan. Same with credit card debt.

Auto loans are secured debts; they can be good for credit because they diversify the type of debt that you have, and they show lenders that you've been approved for a loan that was more complicated than a credit card.

If you already have a mortgage and you are applying for a second one, the new lender will want to be sure that you can afford both mortgages, so they will be concerned with your debt-to-income ratio.

If want to invest in a rental property, know that most lenders will not count rental income until you've been renting a home for two years. So, you must have enough income to qualify for a new mortgage.

If you're buying a new home, contact a real estate attorney for assistance!

Related News:

Do Sellers Have to Disclose Whether a House Is “Haunted” Or Not?

Have you watched the popular television show American Horror Story ? In the first season of this show, the main characters purchase a haunted house that has severe ramifications on their life. The ...
Read More »

New Study Finds More Retirees ‘Upsizing’ Homes

Traditionally, retirees are known for downsizing in retirement. The move was thought to be less of a financial burden, less house to maintain, and less to clean. But, a new study may have proved that ...
Read More »

Best-Kept Secrets for Selling a Home

With the peak buying season around the corner, there are things that you can do that can improve your chances of a speedy sale. What steps can you take to attract buyers and get offers rolling in? #1. ...
Read More »