Does debt have a negative impact on your ability to get approved for a mortgage? If you are preparing to buy a home, then there are a few things that you need to consider to improve your credit score and prepare financially. At DUFFY Realty, we want to help you buy the right home for your family. In this article we will discuss the Types of Debt to Improve Your Mortgage Approval. So, we are sharing these tips to help with your mortgage approval.
Boost your Credit Score
Certain types of debt can boost your credit score. Lenders want to see that you are capable of making timely payments, so carrying debt balances can be beneficial to establish a history of payments. Regular payments and consistent history with credit are both important factors to help with your credit score.
When you are applying for a mortgage, lenders will check your credit score. A high credit score makes it easier for you to get a great interest rate. If your credit score is low, then you might have a hard time with approval or you might be offered a high interest rate.
Make sure that you have both secured and unsecured debt when you are building your credit history. For example, you might have a car loan which is a secured loan, and a credit card which is unsecured debt.
Over-Borrowing Can Hurt You
What is your debt-to-income ratio? Carrying a few balances is beneficial to help you build a strong credit score. But, it can be harmful if you have too much credit to your name. When your ratio of debt is high, then lenders might be hesitant to give you a loan because your income is already leveraged for other payments.
It is a good idea to pay down some of your debts before applying for a mortgage. These payments bring down your debt-to-income ratio and help to free up the cash flow to show that you can make your monthly mortgage payments. At the same time, you are building your credit score by showing that you can pay down the debts.
Talking with a Professional
The best thing that you can do is talk with a financial professional so that you are ready for mortgage qualification when the money is needed for your new home. If you don’t already have a lender to work with, then you can talk with an Atlanta real estate agent to get a referral.
At DUFFY Realty, we want to make it as easy as possible for you to buy the home of your dreams. Your family deserves the best, and we are here to help with you real estate needs. Our team is the leading real estate group in the Atlanta area, and we are here to help!
Talk with us and we can help you find the right mortgage professionals to work with. Together, we will help you prepare to buy a new home so that you can create new memories with your family. Call us to learn more about the real estate services that are available: (678) 318-1700. We hope you enjoyed our article about the Types of Debt to Improve Your Mortgage Approval.