*disclaimer: Not all individuals will qualify for each loan type and/or scenario. Please contact me to see if you'd qualify for certain loan products and/or discuss your options.
Debt. That four letter D-word that everyone despises.
Is it possible to get a home loan even if a borrower has previous debts? What if it's credit card debt? A car loan? Or those dreaded student loans?
Lets take a look at different examples of when debt is used and what it means when it comes to getting a mortgage.
First, lets learn from the movie "Confessions of a Shopaholic". At the beginning of the film, Isla Fisher's character, Rebecca Bloomwood, finds herself using this magical thing called a credit card on all of the newest fashion trends. She uses the card recklessly and racks up just over $16,000 worth of credit card debt in a matter of what seems like a few days.
Spending money like Ms. Bloomwood is a dangerous habit that can land you in a lot of hot water very quickly if you don't have the means, or work ethic to pay off the debt.
Going into this much credit card debt is avoidable.
To be honest though, there many people in this world who are living proof that credit cards can be used in a responsible way. Credit card debt is not the end-all-be-all, and it's okay if you use credit cards on your purchases.
At certain points in life, debt is unavoidable, and sometimes, debt can even turn into a good thing.
Lets take a look at student loans.
Student loans may be a necessary move when it comes to getting a good education. Colleges and Universities aren't cheap. Unless you're killing it in the workforce in your teens, or land a full ride scholarship in high school, there's a good chance you'll need to take out a loan to help you reach the financial goals you have. If used wisely, those student loans will go towards a degree that will land you a job that pays well. Good paying jobs can lead to paying those loans off quickly, financial stability and a comfortable life for you and your family.
Here's the good news. It doesn't matter if it's credit card debt, student loans, car loans, or other forms of debt. Getting a home loan is not out of the question.
Loan officers look at debt during their review of a borrower's qualification status. They do this by reviewing credit scores, bank statements, and looking at an overview of a borrower's current debts. Loan officer's will then determine a DTI (debt to income) ratio for the borrower. The DTI ratio tells a loan officer if a borrower meets the loan qualification standards, and is currently able to afford a home loan on top of their other debts.
If a borrower has shown a history of making their payments on time, and a diligent desire to pay off their debts, the lenders view that person as a good candidate to lend money to.
If a borrower hasn't shown this type of earnestness to get their finances in order yet, don't worry. There are options available that a loan officer and other professionals can suggest in order to get a borrower back on the right track. Once a lender sees the progress a borrower makes, home financing can be made available to them.
So, long story short. If you have debt, don't think that you are too far gone to get home financing. Give me a call today and lets discuss how we can help you get into your future home.
*disclaimer: Not all individuals will qualify for each loan type and/or scenario. Please contact me to see if you'd qualify for certain loan products and/or discuss your options.
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Momentum Loans NMLS #1606597
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