Including credit card debt as part of mortgage loan – 1st time buyer?

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We are looking into purchasing a condo for our 1st owned housing. My wife and I make about 125,000 a year combined income and have good credit ratings with steady jobs (more than 5 years in the same company). The problem is that our cc debt accumulated through our early years is in the 50k, so paying for cc monthly payment + mortgage is not possible. Is it possible to fold our cc debt into a mortgage loan so we can at least afford to buy a condo/house? thank you.

  1. Reply
    January 24, 2011 at 12:42 pm


    I don’t know where you live, but I guess you can get a loan out and include your cc debts. If not when you initially take out the loan then definitely after a year or so, when your house has increased in value. (you can in Ireland, so I’m guessing its the same where you are)

    It will clear your debts and usually mortgage repayment are at a much lower interest rate then credit card debt. While this is good way to release extra cash, I would not recommend it as a practise as the lenght of loans should really reflect the useful economic life of the asset purchased, in other words there is no point taking out a 10 yr car loan when you’ll probably want to up date the car in 4 years time.

    But ask your mortgage provider, as I said if not now, then in a year when there is extra equity on your home

  2. Reply
    January 24, 2011 at 1:02 pm

    Not the way most lenders know about. But there is a way to do such that will work. You have CC on your file and most lenders look at that almost the same as a BK. To qualify for a conforming loan the underwriters will need to see 1 year post CC program history so they know you have learned better credit habits. Your income will allow a non conforming lender to finance you including those payments as long as there are no liens or judgements. Your hardest obstacle will be that of getting a decent purchase loan and there’s the traditional mindset and solution most agents and lenders answering this question will know ( as most here have shown). Heres your best solution and while not simple it is easier than most think. Forget about doing it as a purchase and instead make it a re-fi. I have done many of these and its just a matter of taking title subject to existing liens and cash out refinancing. You roll all costs into the new loan and can leave closing with cash and no previous out of pocket expense. This isnt a Carlton Sheets method, it is far better than even he teaches. I have done this on a condo while it was in foreclosure and the buyer had debt, an IRS wage garnishment, and a low 500 credit score. The key is to find a property that will appraise high enough to absorb all costs. The timetable for this is under 30 days also. Locating a desperate seller isnt tough these days and make sure you run the numbers to cover your debt and costs.

  3. Reply
    January 24, 2011 at 1:05 pm

    Wow! I would strongly advise against doing that!!

    Say that you want to sell that condo due to whatever reason down the road. You need to clear ALL of that debt to sell. If you purchase that condo at market value then you add $ 50k on top of that, the market better be booming to accommodate that negative equity that you incurred!

    Good luck, but again I’d warn you from doing that.

  4. Reply
    January 24, 2011 at 1:17 pm

    Combining the cc debt into the mortgage is a good idea when there’s equity on the home. However, since you are a first time buyer and don’t have a home yet, that is not possible. How much down payment are you thinking to put on the condo? Depending on that amount, it may be possible to pay off the cc debt instead of the down payment and get a higher mortgage payment instead. I am a Realtor and a loan agent, so I help people figure out situations like that from time to time. If you give me more detail, I can try to help you figure out how to approach this.

  5. Reply
    January 24, 2011 at 2:00 pm

    Unfortunately, no. Mortgage loans are based on a percentage of the sales price or appraised value, whichever is less. Mortgage investors loan only on real property so you cannot include secured debt in a purchase.

    Once you have the home and it increases in value, you can pull equity to payoff debt.

    There may, however, be ways in which your mortgage could be structured so that you could take a few years and payoff the credit card debt and then redo your mortgage to fully amortize the payment.

    Feel free to email me if you have further questions.

  6. Reply
    January 24, 2011 at 2:32 pm

    I just went through the same thing. Many banks will not lend you with cc debt that high. Many want you to pay it down first. If you have decent credit i would look into a personal loan from your bank rather then have credit card debt. The interest rate might be lower as well and pay off as many credit cards as you can. The other thing you have to watch out for it new available cc balances. The banks look at the limits on your cards as to what your total dept could be. So say you have a card with a 5G limit but only have a 2G balance most mortgage companys count that as 5g debt so you have to not only pay some off you need to close as many as possible. If you trying to get a mortgage you don’t want to use your credit cards or apply for any loans while that mortage application is in progress. They check your credit report the day before you close and if you have added debt or see loan inquiries it could squash the deal. They have no clue by looking at your report if you were approved or not for the loan if its a brand new inquiry. Good luck I know its tough. thats why I moved from Long Island to Omaha Nebraska. on your income you could buy 3 houses here 🙂

  7. Reply
    January 24, 2011 at 3:25 pm

    Not on a purchase mortgage…. not legally anyway.

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