Can I Add Credit Card Debt Into My Home Mortgage Loan?
Reader Question: Can I add my credit card debt in with the home mortgage loan I am applying for?
In most cases, the answer would be no. You could roll other debt into a home refinance or an equity loan, because you're using your existing equity to pay off the credit card debt. But you can't roll it into a regular purchase mortgage -- at least not that I've heard of.
If I were about to buy a home, and I also wanted to eliminate my credit card debt, I would do the following:
If I got approved for a mortgage and I could easily afford the payments on top of my other debt, I would go ahead with the home purchase. Then I would get comfortable making my mortgage payment for a few months, to see how much money I had left over each month. Next, I would create a payment plan that allowed me to pay down my credit card debt. In order to do this, you have to pay more than the minimum balance due each month -- because the minimum balance is mathematically designed to keep you paying for life!
If I got turned down for a mortgage because of my credit score, then there's a good chance I'm using too much of available credit limit. Maxing out your cards, or even pushing the limits on the cards, can hurt your overall credit score. This in turn can hurt your chances of getting a mortgage loan. So in this scenario, I would focus on paying down my cards and doing other things to improve my score.
Clearly these aren't the only options for the above scenarios. It's just what I would do.
Related Q&A sessions:
In most cases, the answer would be no. You could roll other debt into a home refinance or an equity loan, because you're using your existing equity to pay off the credit card debt. But you can't roll it into a regular purchase mortgage -- at least not that I've heard of.
If I were about to buy a home, and I also wanted to eliminate my credit card debt, I would do the following:
If I got approved for a mortgage and I could easily afford the payments on top of my other debt, I would go ahead with the home purchase. Then I would get comfortable making my mortgage payment for a few months, to see how much money I had left over each month. Next, I would create a payment plan that allowed me to pay down my credit card debt. In order to do this, you have to pay more than the minimum balance due each month -- because the minimum balance is mathematically designed to keep you paying for life!
If I got turned down for a mortgage because of my credit score, then there's a good chance I'm using too much of available credit limit. Maxing out your cards, or even pushing the limits on the cards, can hurt your overall credit score. This in turn can hurt your chances of getting a mortgage loan. So in this scenario, I would focus on paying down my cards and doing other things to improve my score.
Clearly these aren't the only options for the above scenarios. It's just what I would do.
Related Q&A sessions:
Labels: Home loans
posted by Brandon at
12:01 PM
