Owning a house is a dream for most Americans. It gives families security and peace of mind.
Since not everyone is capable of paying a house outright, most resort to getting a mortgage. Mortgage Ogden knows that there are many requirements in getting a mortgage loan. One of these requirements is a good credit score. Mortgage lenders are aware that the credit score can make or break a mortgage deal.
Before buying a house, you first need to determine your credit score. A good way to improve credit score is to pay off both secured and unsecured debt. These debts can affect your mortgage worthiness.
What are these loans that can affect mortgage worthiness?
These loans are unsecured debt that cannot be discharged in bankruptcy. Paying this loan takes decades. It is important to pay them off as soon as possible. A large student loan will affect your ability to qualify for a mortgage.
This type of unsecured debt typically has a high-interest rate. Even though this loan will not show up on your credit report, defaulting on this type of loan can hurt your credit standing.
Unlike student and payday loans, auto loans are secured debt. The rule for this loan is simple: If you can’t pay off the loan, the bank takes your car. An unpaid loan can ruin your credit score.
On the bright side, auto loans can increase your credit score if you pay it off. Some mortgage lenders even look at auto loans favorably because they are harder to obtain.
Existing Mortgage Loans
In a mortgage loan, your property serves as collateral. Missed payments affect your credit score and can even make mortgage lenders nervous and hesitant in the event you apply for a second mortgage.
When you have any of these loans, it’s important to look at your debt-to-income ratio. It can determine whether you have the ability to pay off the mortgage every month.