March 25, 20263 min read
If you are planning a purchase, understanding this topic before you submit an application can prevent surprises. Credit-card balances can affect a mortgage in two ways: they influence credit utilization and create a monthly debt obligation for qualification.
Key points to understand
Here is what matters most:
- Lenders may calculate a required monthly payment from the outstanding balance even if your current minimum payment is lower.
- High utilization can also pressure your credit score and make the file look more leveraged.
- Paying cards down before a mortgage application can improve both debt-service ratios and credit presentation.
- Avoid moving balances between multiple new accounts immediately before applying unless the strategy has been reviewed.
If cash is limited, ask which debt payoff produces the largest improvement in mortgage qualification.
Want this applied to your own numbers?
Call Phil Cragg at 866-349-4915 or request a written comparison.
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