Should I Pay Off Debt Before Applying For A Woodland Hills Home Loan?

Hoping to relocate to Woodland Hills, CA, and worried you’ll have a hard time getting a loan due to debt? This is understandable but the good news is that debt doesn’t ruin your chances of fulfilling your dream of homeownership. It might delay it a bit –but you can still buy a home in Woodland Hills.

The first this to do is understand your debt and how it affects your mortgage application. Then you can see if paying it off (or may just some of it) will help your chances of getting approved for a home loan. Want answers now? Please contact us at Nuline Funding of Woodland Hills for fast and simple answers to all of your home loan questions. 

How Credit Card Debt Can Impact Home Loan Approval

More than half of U.S. credit cardholders admit that they also have credit card debt. If you are applying for a home loan, this can affect your application approval chances. Here’s how:

  1. Excellent credit boosts Your Chances of getting approved.

Lenders check your credit score and the details in your credit report to gain insight into how well you manage your debt. Paying debt on time and maintaining low debt can result in raising your credit scores. If you’ve done this consistently, your excellent credit not only increases your chances of loan approval but also qualifies you for better interest rates.

Interested in getting a Woodland Hills, California home loan? Get in touch with one of our Nuline Funding loan experts today.

  1. Your Debt-To-Income (DTI) Ratio

A crucial factor in your loan application is your DTI. The larger your credit card debt, the higher your DTI ratio which lowers the chances of getting approved. Lenders determine your DTI by dividing your monthly debt by your gross (pre-tax) income.

Lenders want to ensure that the borrower can manage mortgage payments along with their current debt. So, generally speaking, a DTI ratio above 36% will have a hard time getting their application approved. 

For more information about DTI, please inquire with Nuline Funding, your local mortgage broker in Woodland Hills, CA.

 

When should you leave your credit card debt alone?

Having credit card debt may lower your chances of approval but it doesn’t mean it disqualifies you completely.  While paying off credit card loans is a great option because it lowers your DTI,  it may not be necessary to pay off your credit card debt before you apply for a loan.

For example, if your credit score is 700 or higher, you may not need to pay off your credit cards since you already have a strong score.

Should you pay off your credit card loans before applying for a home loan in Woodland Hills? 

Reducing your payments or aiming for a lower interest rate by eliminating credit card debt is always a good idea, but remember that it may not be necessary for buying a home in Woodland Hills.

Looking for the best loan program? Check out a conventional home loan by Nuline Funding and contact us for more information. 





* Specific loan program availability and requirements may vary. Please get in touch with the mortgage advisor for more information.