CHRISTMAS SPENDING & CREDIT CARDS

Black Friday and Cyber Monday are just a week away and people’s Christmas spending will be in full gear. 21.5% of Americans will go into debt because of Christmas, but is that always the wise choice when buying a home is on your Wish List? MHQ Mortgage Headquarters is here to help you make your wish of owning a home a reality. Knowing how credit cards affect your ability to get a mortgage could help you with your spending habits this holiday season.





5 WAYS CREDIT CARD DEBT AFFECTS GETTING A MORTGAGE

Five main factors related to your credit card debt are considered when submitting your mortgage loan application. Below are the ones we will review but it is not an inclusive list. It is always best to contact your mortgage loan professionals around Lake of the Ozarks at MHQ Headquarters.
 
  1. Debt-to-income ratio. To make sure you can repay your loan, lenders calculate your debt-to-income (DTI) ratio by dividing your total monthly debt by your gross monthly income. The Consumer Financial Protection Bureau (CFPB) recommends a DTI ratio of 43% or less. If you have high credit card payments due to a large outstanding balance, you might not qualify for the loan amount you need to buy a home.
  2. Your credit score. A good portion of your credit score is based on your total revolving debt compared to your available credit. This is called your utilization ratio, and anything above 30% can push your credit scores down. In other words, if you have $10,000 of available credit, charging more than $3,000 could negatively impact your scores.
  3. Home price. If your credit card debt is too high, you may have to scale back on your purchasing power for a home. When making the biggest purchase of your life, you want to ensure you get the home of your dreams. Making sure your credit card debit is manageable will help you achieve this.
  4. Your mortgage interest rate. The lowest mortgage rates typically go to borrowers with a score of 740 or higher. If your score has taken a hit because of maxed-out credit card debt, you could end up with a much higher interest rate.
  5. Your mortgage program eligibility. If your credit score is below 620, you may not be eligible for conventional financing. Although loans backed by the Federal Housing Administration (FHA) allow for scores as low as 600, you’ll pay much more expensive FHA mortgage insurance costs to cover your lender against losses for taking on the extra risk that you could default.



CHRISTMAS GIFTING IDEAS

When 1 in 10 gifts are returned and even higher amount not used after the first week of owning the gift, consider gifts that warm the heart or teach how to pay it forward. Here are just a few ideas.

· Volunteer at a local charity
· Serve food at a local food bank
· Help an elderly neighbor or friend
· Start a new tradition of hand making gifts
· Find an activity the whole family can do together
· Donate money that you would spend on Christmas to a charity or someone in need

Christmas time at Lake of the Ozarks is peaceful & beautiful place. And whether this is your full-time home, part-time home or you want to make the lake your home, MHQ Mortgage Headquarters can guide you. Contact any of our mortgage professionals for any and all your questions and concerns.


Mortgage Headquarters of Missouri, Inc
4824 Osage Beach Parkway, Suite 1
Osage Beach, MO 65065

Office: (573) 302-9990
Toll Free: (888) 799-1206
Fax: (636) 648-9917

NMLS # 1229111

Follow Us On:   Facebook   |   LinkedIn

Location: Osage Beach, MO 65065, USA

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