So......I have four credit cards that are near their limits, and I was wondering if I HAVE to pay them down or off before I could get approved for a mortgage loan?
NFCU 10,000/4,956
Barclaycard 750.00/462.00
Cap one 500/400
Discover 1,700/1,240
Thanks Shane and other knowledgeable forum members
@CreditHealthy wrote:So......I have four credit cards that are near their limits, and I was wondering if I HAVE to pay them down or off before I could get approved for a mortgage loan?
NFCU 10,000/4,956
Barclaycard 750.00/462.00
Cap one 500/400
Discover 1,700/1,240
Thanks Shane and other knowledgeable forum members
Paying them down & the small balances off will help your FICO score and your debt to income ratio. Both of which will be looked at when you're trying to get a mortgage. Best for both would be paying all but one off and having a 7-25% utilization on the remaining one. Have you checked to see what type of FICO score and down payment is needed for the type of loan you're attempting to get?
Thanks for the response. Yes, If everything works out, i should have the scores (FHA) and I do have the appropriate down payment that is needed to obtain the loan. I just wanted to know if the near limit CC's are frowned upon by the underwriter as it relates to approving or denying a mortgage loan.
@CreditHealthy wrote:Thanks for the response. Yes, If everything works out, i should have the scores (FHA) and I do have the appropriate down payment that is needed to obtain the loan. I just wanted to know if the near limit CC's are frowned upon by the underwriter as it relates to approving or denying a mortgage loan.
I'm not a Mortgage person, but I know that the better your Debt to income ratio, the more your lenders like it. They really like it when you have good percentiles and near maxed out cards is not a good sign. Having said all that. If your FICO 04 scores already gets you the rate you're looking for, then save the extra money. Let the lender advise you on anything that they'd like you to pay off.
I'm financially conservative, so I tend to pay everything off and get myself in the best position so that I don't end up with being just under the bar (or shy of being eligible). Is there any chance you can save enough to go conventional instead of FHA so that you won't have to deal with PMI over the life of the loan? Again careful me peaking out. However, as long as you save the money instead of spend the money, you should be fine, because you'll have options.
@CreditHealthy wrote:I just wanted to know if the near limit CC's are frowned upon by the underwriter as it relates to approving or denying a mortgage loan.
If your file is very borderline in qualifying (like you are 1 point away from not qualifying, or your debt to income ratio is at the max that the lender will accept) then it wouldn't be unfathomable that the underwriter could have an issue with the credit cards being close to their max. But people with maxed out credit cards get approved for mortgages all the time, and your credit scores seem good, so if you aren't pushing your debt ratio to the max then it should be OK.
Thanks Shane and bdhu2001 for this helpful information, I really appreciate it