There are a couple easy ways to get a better mortgage that most people don’t think about – and they mostly have to do with your debt-to-income ratio. So here’s the deal: figuring out your debt and credit cards can truly increase your ability to get a better mortgage. Check out our tips below and you’ll be well on your way!
- Avoid too much, too quickly. Opening too many credit cards will hurt your credit score – but mostly if you open them over a short period of time. Because every time you get one, your social security and credit check will show up on your credit report. And the more inquiries you have in a short period of time, the more it lowers your credit score. That includes even the department store cards that seem so handy. I know, bummer.
- Don’t panic and close them all. If you read the above and want to overcompensate, hold up. Lenders are looking for you to be using 30% or less of your credit limit – it shows responsibility. If you close a lot of cards at once, it could move you from using well under 30% of your available credit to well over. Try closing a card every 6 months or so – or don’t close them at all. Having the cards doesn’t really hurt you. It’s the rate you open them.
- About Deferring Student Loans… This doesn’t mean they don’t count. Even if they’re deferred, a lender still has to consider it because it is a payment that you will be making in the future. It’s something you should keep in mind when choosing the best course of action to get a better loan for you.
- Avoid big purchases. Don’t take a loan out for a car right before you are looking to buy a house – try to wait until after. Making big purchases will raise a lot of questions when lenders look at the flow of money in and out of your accounts.
We hope this will help set you up to get a better mortgage! If you’re still struggling, give us a call – we never turn down cases just because they’re hard. In fact, those are the ones we spend the most time on. It’s part of our family-friendly, faith-oriented way of doing things.
The Christian Mortgage Mom