If you pay the entire balance on your credit cards every month, you probably won’t have problems to afford a home mortgage loan as we described in the previous article.
However, banks do not only care about how much you owe to credit cards. They also analyze the potential of debt they could represent. More future debts mean a higher risk for you to afford to pay your house!
Let’s take an example. Imagine you have two credit cards. An Amex and a Visa, both with a $10,000 limit. For banks, this means these credit cards could easily get you $20,000 more debts. Not a good plan if you have to pay a big home mortgage…
Thus, even if you pay the entire amount of all your credit cards every month, your banks consider it as if they were full in order to get the worst scenario.
If you add to your monthly payment, the minimum amount you have to pay to your full credit cards (2.5% of $20,000 limit), $500, it could be the bad information to make bank choose not to give you’re the mortgage loan you need!
The solution? If you don’t need such high credit cards limits, call to lower them. In order to be considered safe for a bank to lend you a good home mortgage loan, check your credit cards limits…
Your Best Financial Situation to Get a Home Mortgage
In order to analyze your best financial situation to get a home mortgage loan, here are points to follow.
Calculate your debt ratio. You must be very careful and think of the worst possible financial scenario. Do not underestimate your repayments because it could mislead you and become a nightmare!
Free yourself from all debts you can (car loan, etc.). In order to provide to bank the best possible financial situation to get a home mortgage loan, free yourself from debts, loans and all other factors that can harm your demand.
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