Applying for a mortgage… my credit history?

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I’m a little nervous about applying for a mortgage with my future husband. He has an impecable credit history… no debts, lots of savings, no car loans / student loans…

on my side
I have $ 8K car loan
36K student loans
and about $ 3500 in Credit Card Debt (2K on one card and 1.5 on another) – wedding expenses

My credit score is 732

Will my $ 3500 debt impact our rate?? I am trying to pay it off in full.
Any advice please ;( Thanks!
I had one credit card I paid late about 7-8 years ago when I was young and stupid. Ever since then, my pay back has been impecable

  1. Reply
    May 1, 2011 at 11:44 pm

    “All your debt will cause the interest rate you pay to be higher. Your future husband should apply for the mortgage just in his name. Conventional mortgages require a score of 750 good and best rates go to 800 excellent. Your score is Fair.

  2. Reply
    ice tray
    May 2, 2011 at 12:43 am

    732 is an excellent number and the other loans can be a good thing as long as you are paying them on time. 3500 should not impact it you should consider yourself lucky. if they do give you $ hit then just tell them you are going to apply somewhere else then they might chang there attitude. REMEMBER they work for you, you dont work for them. good luck

  3. Reply
    May 2, 2011 at 1:23 am

    Certainly your debts will impact things. You apply together and are considered together. Paying down your debt is great as it reduces your debt load. Pay off at least one of those credit cards and remain current on your car loan and student loans. Your credit score is good, and shows a pattern of regular payment of your debts, which is a plus.

    They will combine and average your credit scores, income, debt.

  4. Reply
    Rush is a band
    May 2, 2011 at 1:30 am

    The $ 3500 will not impact your rate.

    The $ 3500 plus the payment for the $ 8k car loan plus the payment for the $ 36,000 of student loans will affect your debt to income ratio which will limit the amount you can borrow for a mortgage.

    You should run the numbers both ways and see which is more attractive. Your maximum housing payment is the lower of 28% of your gross monthly income or 36% of your gross monthly income minus your monthly debt obligations.

    For simplicity sake, $ 5000 monthly gross income means that you can afford a mortgage payment of $ 1400 or $ 1800 – monthly debt obligations, whichever is lower. So, $ 1400 with no other debt or up to $ 400 per month in other debt, but once you’ve crossed over the $ 400 per month, it will start to decrease the amount you can borrow. Do this calculation for just your husband’s situation and your combined situation and see which one is better for you.

    good luck!

  5. Reply
    May 2, 2011 at 1:59 am

    Unfortunately, you failed to give all the necessary details. It doesn’t help to just know what your debt is without knowing your income. Debts are only a problem when you don’t have the income to pay them. We don’t know your income nor do we know anything about the size of the mortgage you want. We don’t even know the monthly payments on your debts.

    Mortgage qualification is NOT based on the total amount you owe on debts. Approval is based on what you pay per month on that debt. You didn’t give that info.

    If you are just asking if having debt is a problem regardless of income and payments, the answer is 100% “NO.” Most of my clients have more credit card debt than $ 3500. The average American owes about $ 8000 in credit card debt, so you are way below the average.

    What could be more problematic is the monthly payment on the student loans.

    What we look at for mortgage approval is the credit score, the total monthly payments on the debt and the income. If you already know your score is 732 and you have the income, I don’t see a problem.

    A late payment from 7 years ago is meaningless.

    By the way, don’t pay off any debt before speaking to a mortgage person and getting qualified.

    If you are nervous about applying for a mortgage, you should REALLY be nervous asking for advice here where everyone answering is not a mortgage professional.

    Speak to a mortgage pro. That’s their job. Nothing to be nervous about.

    By the way, NOT having debt as you say for your husband, does not necessarily make credit impeccable. You have a slightly distorted opinion about credit and debt. Your husband might have no debt but he might not have an impeccable credit score. Having some open debt can be a good thing because it shows you have the ability to handle credit. Do you know your husband’s score? Many people who have no debt do not have a great credit score. Credit scores are calculated based on borrowing and paying back money. If the person has never borrowed any money, that’s a problem. Hopefully, your husband has borrowed in the past, but does not owe any debt at the moment.

    Good luck.

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