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You have decided to buy your own home. You believe you are ready, and are prepared, because you have saved for a significant period of time to make the necessary down-payment and reserve deposit. However, if you’re like many others, you probably haven’t focused enough on the effects and implications of your credit card, on getting the best possible mortgage terms, or, in some cases, how certain factors Getting a mortgage loan can make it more challenging than it needs to be. None of us enjoy the added stress and hassles, so this article will briefly consider, review, and discuss 4 examples and the factors involved, about credit card management, and how to do so, wisely. .
1. Balance on your credit card: Lending institutions consider several economic factors, and one important factor, which also affects your personal credit score, is the balance on your credit card. Ideally, they want to see that you are using less than half of your available balance. Several months before you apply for a mortgage, make sure you reduce your balance, and increase the ratio between available and used balance.
2. Number of Accounts/Cards: Most lending institutions and credit rating organizations don’t want to see more than about 4 to 6 accounts. Each of these should be in accordance with the discussion about balance discussed above.
3. loan: Examine closely, and consider how the balance on your credit card, when added to other personal, and/or consumer debt, such as car payments, lines of credit, etc., relates to your income. Mortgage lenders have strict requirements for the ratio of mortgage debt to income, as well as the ratio of total debt to income. Unless, you qualify in both areas, conventional mortgages can be extremely difficult and challenging to apply for and obtain. Another issue to consider is your personal comfort zone, and how credit card debt, and the monthly payments, can create additional stress and hassle.
4. Recently opened accounts: If you are planning to buy a home in the near future, it is essential that you avoid adding any additional loan to your existing loans. In my more than a decade as a real estate licensed salesperson, in the State of New York, I have seen too many instances where individuals, by accepting something, hurt their chances and/or opportunities and/or destroyed. Credit card offer, because of some perceived benefit. For example, when you’re buying something at a retail store, resist opening a charge card with that store because the short-term gain could potentially have a negative impact.
Smart consumers move in a way designed to make their home shopping experience smoother and better. Manage credit card accounts wisely and be prepared!
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