December 14th, 2015 6:27 AM by Jackie A. Graves, President
It’s not impossible to buy a home when you have existing debts. Homebuyers do
it every day, in fact. But you have to know how your existing debts are
affecting your standing with the lender and the ways you may be able to exclude
some debts from your loan approval process.
for a mortgage, the lender takes into consideration your credit
score, the cash you plan to use on a home, your ability to pay back the loan,
and the amount of expenses you have (including a proposed mortgage payment)
against your monthly income. They’re the four Cs of lending: credit,
collateral, capital and capacity. Each play a key role in your ability to
obtain a mortgage.
Liabilities, such as monthly payments on
other loans, take away from your capacity to handle a mortgage payment. If all
of your income is going toward debts (with or without a mortgage payment
included), loan qualifying can quickly become very problematic. Installment
loans typically carry the largest monthly payments and hurt your chances of
qualifying the most.