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Home Loan Refinance

The dreaded "D" word- Debt

Posted 10/7/2014, Written By: Dean Butterfield

In the past few weeks, we've written on a variety of topics related to mortgages:  how student loan payments are treatedwhere to start when it comes to creditsome honesty regarding closing costsoptions regarding the down payment and more.  So how does carrying debt, no matter what type, affect your ability to get a mortgage?

Here are the top 3 debt concerns we hear about at Michigan Mutual, Inc:

  • Bankruptcy - Having a BK in your past does not automatically disqualify you from getting a mortgage.  The type of bankruptcy and how long it has been discharged is crucial in determining if you qualify.  There are different waiting periods for each loan program and we would be happy to go over them with you.
  • Debt Amounts - Each loan program requires you to stay below a different debt-to-income ratio level. The more debt you have to re-pay, the harder it is to get pre-qualified for a more expensive home. We’re not telling you to go close all of your credit cards, mainly because you have to show you have some open, just to be cognizant when you open new ones.
  • Credit Cards - It's not so much the credit limit that matters as it is how you are using that credit card.  The government guidelines and investors require us to look at how long you've had the credit card, how much of the limit you are utilizing and payment history because they carry more weight than the limit itself.  We are looking for proof that you can handle and re-pay debt for an extended period of time.

There is so much to consider in regards to debt, credit score, credit history, etc. The best way to determine what you can and cannot qualify for is to call a licensed loan officer. Call us to find out what you can qualify for:  800-700-5839

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I’ve been in the industry for more than 20 years. Michigan Mutual's owners have a long history of trust and customer service and have built the company based on their morals.

Christian Newberry

Christian Newberry