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How Does Your Credit Card Debt Affect Your Mortgage Rate?
How Does Your Credit Card Debt Affect Your Mortgage Rate?
Credit card debt is a common discussion in today's age and, when handled responsibly, can be a great way to boost your credit score when applying for a mortgage. Although a little credit card debt can do wonders, having too much can hurt your chances of obtaining a mortgage loan. Most Americans set a goal of buying a home, making it important to keep credit card debt under control. If you find yourself asking, "How does your credit card debt affect your mortgage rate?", then stay tuned to hear our expert realtors of Choice Properties explain the potential outcomes.
Having High Credit Card Balance
If you have a high credit card balance, be prepared to show proof of available funds used to pay off the balance. If you lack the funds you could be subject to a higher interest rate on your loan. Having a strong credit history with monthly payments will help show your financial security, preventing a rise in interest rate. It is important to remember most lenders check credit in the final stages of your loan approval. You do not want to risk running up your credit card debt before closing, even if you are approved for a favorable loan rate as this could delay closing.
Having Zero Credit
When applying for loans with a history of zero credit, you may be asking yourself what options are available. Although the mortgage loan process is different, there are ways to secure a loan with no credit score. Applying for a government loan, or FHA loan, requires more paperwork as you must show you have paid rent or bills in the past. These typically come with a larger down payment. A second option is to have a co-signer, preferably someone with a history of good credit. If you prefer to avoid both of these methods, we suggest taking 6 months or more to build credit.
By lowering your credit debt or even paying it off, you are lowering your interest rate on a mortgage loan. Controlling unnecessary spendings and maintaining a strong monthly payment will set you on the right track of a good mortgage rate. Once you are ready to go, the realtors at Choice Properties will be waiting to help find the home of your dreams!
Choice Properties understands your needs and desires when it comes to the home search. We are here to help you define what you want, seek the best property and move forward feeling educated and able to make good decisions throughout the process. You can trust us to help you navigate it with the best real estate agents working for you. Call us to get started on your dream home search today.