Shelly Ragan - NextHome Signature Real Estate

The Ragan Team • Call (402) 672-5522

  • Home
  • About
    • About The Ragan Team
    • Privacy Policy
  • Home Search
  • Resources
    • Buyers
    • Sellers
    • What’s Your Home Worth?
  • Visit Main Website
  • Blog
  • Contact

How Does My Existing Debt Affect Getting A New Mortgage?

November 8, 2019 by Shelly Ragan

How Does My Existing Debt Affect Getting A New MortgageCarrying debt is a common problem that people have. Some of the most common types of debt include student loans, credit cards, and motor vehicles. When you are interested in buying a new home, you often think about whether or not your debt is going to hurt your chances of qualifying for a new mortgage.

Fortunately, you may still get a new home with that debt. There are several factors that may determine whether or not you qualify.

Your Debt to Income Ratio

The debt to income ratio is a major factor that the mortgage lender is going to consider when deciding whether or not you will qualify for a new mortgage. In general, the magic number is 43 percent. If your debt exceeds 43 percent of your total income, the lender will have a hard time giving you that new mortgage.

For example, if you make $5,000 per month, you will want to have less than $2,150 in monthly debt payments. To make yourself a more attractive candidate for a mortgage, try paying off some of your existing debt.

Taking A Look At The Credit Score

The lender is also going to consider your credit score. The higher your credit score is, the more likely the lender will reward you with a loan. In order to keep your credit score high, make sure you manage your debt well.

Making your debt payments on time will keep your credit score high. Missing debt payments will lower your score. Manage your existing debt well and you will have a better chance of qualifying for a mortgage.

Making Sure You Can Handle A Mortgage

Finally, the lender is also going to take a look at whether you can take on the responsibilities of owning a home. The monthly mortgage payment isn’t the only expense you will be taking on. Some of the other issues you will have to handle include property taxes, maintenance costs, and homeowners’ insurance. 

The bank or credit union will want to ensure you can handle these costs. To make these expenses easier to bear, it might be a good idea to pay off some of that existing debt.

Investing In A New Mortgage

Looking for a new home is exciting. You can purchase a house with existing debt as long as it is minimized and managed well. Think about these factors before investing in a mortgage.

If you are in the market for a new home or interested in listing your current property, be sure to consult with your trusted real estate professional.

Filed Under: Mortgage Tagged With: Debt, Loan Qualification, Mortgage

Shelly Ragan

Contact Shelly


REALTOR ®
CALL (402) 672-5522

RE LIC#: 20010706
NextHome Signature Real Estate
Ragan Team

Connect with Us

Archives

How can we help?

  • This field is for validation purposes and should be left unchanged.

Recent Articles

  • S&P Case-Shiller Home Price Indices Show Mixed Readings in March
  • Crafting a Counter-offer That Doesn’t Scare Away a Potential Home Buyer
  • Mortgage Approval With An Unconventional Job – How Does It Work?
  • What’s Ahead For Mortgage Rates This Week – May 30, 2023
  • Should You Help Your Kids Pay for Their Mortgage?

Looking For Something?

Categories

Our Location


NextHome Signature Real Estate
13340 California St, Suite 100
Omaha, NE 68154

Copyright © 2023 · Powered by MySMARTblog