11/03/2014 @ 2:14PM
Buying a home is a bucket list item for many of us, but we often find it difficult to finance such a massive purchase. Especially if you have credit card debt — or no credit at all — you may struggle to convince a bank officer to sign on the dotted line.
Here, we answer a few questions relating to credit, credit card debt and mortgage loan applications.
Does my credit card balance affect my ability to get a favorable mortgage loan rate?
Yes. Depending on your bank, most mortgage loan officers will want to know that you have the assets/cash to pay off your outstanding credit card balance. If you don’t, you may be subject to a higher interest rate.
Worried that you won’t get a loan at all? This comes down to your credit history. Credit history is the largest factor in determining your credit score, so if you’ve paid off card balances in full for some time, you should be OK. But if you’ve historically defaulted on your credit card debt, you may have a more difficult time getting a loan.