When it comes to … “What affects your mortgage application?” There are several things to know. We’ll go through the most questions our clients have.
Does Car Insurance Affect a Mortgage Application?
No, it does not, but the better credit you have, the cheaper your car insurance will be. Also, if you fail to pay your car insurance and it goes to collections, it will affect your credit score and chance of getting a mortgage.
Does a Car Lease Count on Liabilities?
Yes, when you lease a car, it is considered rent and a monthly debt obligation, and therefore it does hurt your Debt to Income Ratio (DTI). It is also ongoing. If you have a loan and there are fewer than ten months on the loan Fannie Mae does not even include the payment on your DTI.
Will Increasing My Credit Limit Affect My Mortgage Application?
Yes, it will affect your application, but it can also help. When you increase your credit limit and don’t increase the amount owed on your card, your credit utilization goes down and positively impacts your credit score. But – don’t go on a spending spree with your new increased line of credit.
Will a Business Loan Show on My Mortgage App?
Maybe. There are many types of business loans. Each has a different effect on personal credit. If you have personally guaranteed the loan and it is reported to credit bureaus, it will affect your credit. No personal guarantee, then it’s unaffected.
Will My Overdraft Affect the Chances of Mortgage Approval?
Maybe – it depends on the lender. It might not be too bad if you have one overdraft and immediately immediately handle it. If your bank statements show a chronic number (the lender defines chronic) of overdrafts, you most likely won’t get approved.
Do Payday Loans Affect Mortgage Application?
Yes. Many lenders will not loan to anyone with a payday loan, even if paid on time and in full. Payday loans are a major red flag if you have more than one over a few months. Although this type of loan may not be reported on your credit report – any payments or deposits will show up on your bank statements.
Understanding what affects your home loan application can put you in the driver’s seat and on to an approved mortgage. And the team at Homestead is here to help you through every step of the process.
Homestead Financial Mortgage’s low-interest home loans are some of the best in the states we serve. We’re licensed in Arkansas, Colorado, Florida, Illinois, Indiana, Kansas, Kentucky, Missouri, Montana, Ohio, Oklahoma, Tennessee, Texas, and Wisconsin. Contact us today to learn more about the home loan products we offer that are right for you.