Don’t Let Debt Stop a Home Purchase
June 12, 2013
If you are employed and able to pay your rent every month, you may consider homeownership. However, buying a house takes more than income and an excellent rental history. Mortgage lenders are very specific and they thoroughly check financial backgrounds. Unknown to some applicants, too many debts can prevent a home loan.
Don’t let your debts trigger a mortgage loan rejection. Here are tips to pay off your debt.
Increase Monthly Payments.
Making higher payments is key to quickly paying off debt. Let’s say you owe $5,000 on a credit card. Rather than send $50 minimum payments each month, increase your payments to $200. With this payment, you can pay off the debt in about two years. Granted, the amount you pay depends on your disposable income. Look at your budget and determine the maximum you can put toward debt.
Avoid New Charges.
To benefit the most from debt repayment, stop using your credit cards and don’t take out any new loans. If you have to, go to extreme measures and cut your credit cards in half. Don’t cancel your cards. This approach will lower your credit score and further hinder a mortgage approval.
Imagine the satisfaction you’ll feel when you’re able to pay off your debt and hire a Milwaukee mover to move belongings to your new house. This can be your reality. Stick with a debt repayment plan and you can realize your dream.
(Photo attributed to Flickr member @401(K)2013 via the Creative Commons license.)
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