Can I Buy a House with Debt?
Your chances of buying a house with existing personal debt largely depends on the type and amount of debt you have. It is possible to buy a house with existing personal debt if your credit score and financial history are at an acceptable level. Buying a house with debt also depends on the lender you will work with, as they will have their own policies and requirements to gain approval.
Debt can also affect the potential borrowing capacity, or approved loan amount, by significantly lowering the amount of money a lender approves to fund a home loan. You could potentially be required to pay high-interest rates and increased monthly mortgage payments if you buy a house with a significant amount of personal debt.
It is recommended to pay off as much debt as financially possible before going through with the home-buying process. Lenders thoroughly check home loan applicants’ credit scores and financial history to determine the amount of risk posed if approved. Staying up-to-date with your credit score and actively paying the full amount of monthly bills can increase your approval potential.
Making on-time credit card payments, decreasing the consistency a credit card is being charged, lowering high credit limits, cancelling unused credit cards, and decreasing the amount of high-interest-rate debt currently held are a few ways to raise your credit score and improve your financial standing.
Reach out to a Mortgage House lending specialist today for assistance with debt repayments and home loan applications to successfully achieve your home-buying goals.