Can I qualify for a mortgage loan?

Question

My husband and I are wanting to buy a home (after many years of renting). We have a good monthly gross income ($11,500). However, we have a lot of credit card debt (61K) and a small balance on a student loan(6.5K). Our auto loan is payed in full and we have never had any late payments on any of our debts. Our credit scores are about 750 each. We lived in the same home for 6 years and have had stable employment for 17-18 years. Will a lender give us a mortgage with this level of unsecured debt?

Answer 1

When you have poor credit, your list of lenders that will approve you for a home loan can shrink down very small. You want to make sure that you are doing everything in your power to keep your credit rating as high as you can.

Many people will unknowingly hurt their chances of getting approved and make it more difficult for themselves. Here are 3 things you will want to avoid doing if your credit history is already bad.

1. Don't have your credit pulled over and over by different lenders - Many people will, because of their difficulty in getting approved, apply with many different brokers and have the broker pull their credit over and over. Every time your credit is pulled, your score will drop just a few points. In some situations, it can be enough to disqualify you from the loan. The best way to go is to apply with companies online that will give you a pre-approval without pulling your credit, but instead, ask you what your credit is like.

2. Don't Open Too Many New Credit Accounts - If a lender sees that you have a lot of new accounts open it can make them wary to want to lend you money. It can also raise your debt to income ratio, which will make it difficult, if impossible, to get approved. Read more about it at: http://www.credit-card-gallery.com/article/77,Bad_Credit_Mortgage_Loans_Are_You_Killing_Your_Chances_of_Getting_Approved

Answer 2

With the info given you should not have a hard time getting a mortgage with one possible exception-your credit card debt.

Your credit score (is that a FICO score) is high enough. Your living and job stability is very good. But that credit card debt has to be eating you alive. Lenders look at how much money is available to pay the mortgage. Your high credit card debt payments may cost you in a higher mortgage rate.

I would recommend that you start shopping for two things and do a third.

I would start shopping for a mortgage broker or company. It is no different than shopping for anything else. Make appointments and go interview 4-6 prospects.

I would start shopping for a house and a real estate professional. Again set up interviews and find one you can work with.

While you are doing that, bite the bullet for the next two to three months and put every penny you can into reducing your credit card debt-start with the highest interest rate cards first.

Wouldn't you rather be putting money into your house than the credit card companies bottom line? Get rid of the debt as quickly as you can.

Don't over borrow on your mortgage-be frugal. You can always move up. Especially when you have freed the $1,500- $2,000 or so a month in credit card payments you must have.

Good luck!!

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Answer 3

Sure they will-- but the amount will likely be much lower than what you want. They take your gross monthly income and allow up to 45% max to be used for bills. So if your minimum monthly payments added up to 30% of your gross income, you could only use 15% of it towards a home loan, and that has to include taxes and insurnace in the payment amount.

If you've got cheap rent and make $11,500 a month, you should be paying thousands each month towards your debts. What you want is not to lower your overall balance (which of course is the ultimate goal but doesn't make as much sense for a short-term approval) but to eliminate as many monthly payments as possible-- so if you have a few small cards that each have a $50 payment, each one you pay off could increase your mortgage approval by $50/month (almost 10,000 worth of house).
If the student loans are like $100 a month and you can get it paid off in a few months, get those out of the way too.

Start on the smallest debts, get those paid, and then roll that extra monthly savings onto the next one, "snowballing" your payoff. Each bill gone is more that can go towards your house.

Answer 4

Banks will base your approval based on several criteria. One of them is the ratio of your debt to income, so the trick will be to find a house with the right price, so you can afford it. If you have no other debt obligations besides the credit card debt, you should be able to get a loan based on your income and credit score.

One thing to keep in mind is that lenders typically require some reserves in the bank, so you will have to have money in the bank to cover the down payment, closing costs and the reserves. If you have that, you are set. I would consult someone you know in the mortgage business to get an idea of what price of home you can be approved for before starting your search for the right home.

Answer 5

Yes, it sounds like you and your husband can definitely qualify for a loan. The real question is: how much of a loan can you qualify for? Do you need $300,000, or $600,000? The amount you can get will depend on the underwriting of each particular lender. I recommend using a mortgage broker to get pre-approval from a couple of different lenders. Good luck.

Answer 6

I would start to pay off those credit cards. But yes they will give any one a mortgage. Haven't you listened to the news. I would talk to a financial advisor though. Or try to find a house that mortgage would equal your rent amount or less.

Answer 7

I think one will.
Your interest rate and amouint of loan will be set according to your credit score and obligations.

Answer 8

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Answer 9

I k now of some resources. Shoot me an email to [e-mail], and I'll guide you in the right direction.

Marty