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Paid off all my debts, how long before I can apply for mortgage with updated info on credit report?

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Paid off all my debts, how long before I can apply for mortgage with updated info on credit report?

I wasn't qualified for a mortgage because my DTI was way too high. I had tons of credit cards and loans with high balances because I was irresponsible and now have learned my lesson. luckily my parents bailed me out by lending me enough money to pay off all my debts (basically like a debt consolidation loan, except I pay my parents). My question is now that I paid off all my CC debts and loans, how fast can I get a mortgage loan to buy a house. I know the credit report wont update right away, but how long? couple weeks? couple months?

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Senior Contributor

Re: Paid off all my debts, how long before I can apply for mortgage with updated info on credit repo

I would wait at least a month to be sure everything has updated, & then pull my reports myself before asking a mortgage lender to do so.

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Message 2 of 20
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Senior Contributor

Re: Paid off all my debts, how long before I can apply for mortgage with updated info on credit repo

Each one of your CCs will update at the next statement date.  And then it will take a few days to a week for that to hit all of the reports.  So count on about a week after the statement of the last account that you need to update. 

 

But another issue is that there are going to be questions about sourcing the money you got from your parents.  So you're probably going to have to wait at least two months so that the money they gave you is "seasoned."  They usually ask for two months of bank statements in an applicaiton and they will want to know where any large deposits came from.

 


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Message 3 of 20
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Valued Contributor

Re: Paid off all my debts, how long before I can apply for mortgage with updated info on credit repo


@Walt_K wrote:

Each one of your CCs will update at the next statement date.  And then it will take a few days to a week for that to hit all of the reports.  So count on about a week after the statement of the last account that you need to update. 

 

But another issue is that there are going to be questions about sourcing the money you got from your parents.  So you're probably going to have to wait at least two months so that the money they gave you is "seasoned."  They usually ask for two months of bank statements in an applicaiton and they will want to know where any large deposits came from.

 


Agree that you will need to wait an month for the report to update.  Pull them yourself to make sure before apping.  Whether you wait two months or not doesn't really matter. Since it is a loan from your parents you still need to disclose that, a debt is a debt regardless who the lender is.

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Regular Contributor

Re: Paid off all my debts, how long before I can apply for mortgage with updated info on credit repo

IMO I would wait 2 good months to give it time to mature. Good Luck

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Frequent Contributor

Re: Paid off all my debts, how long before I can apply for mortgage with updated info on credit repo

OK, I'm going to go a little different way with this, and hope it is accepted in the helpful spirit it is offered Smiley Happy

 

You really didn't pay off your debt, you consolidated your debt and got (hopefully) a low or no interest loan.  It may not show on your CR, but it does in your checkbook!  You have not really substantially changed your situation, you have simply made it look that way to lenders who pull your CR.

 

You don't want to buy a house and have a bunch of debt hanging over you - that will take all the joy out of home ownership.  I suggest you repay the loan to your folks, have some reserves and a good downpayment, then buy the house.

 

Again, I'm just trying to be helpful.  If I have misunderstood your situation, or if this is not helpful, just ignore me (like my wife does!)



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Message 6 of 20
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New Member

Re: Paid off all my debts, how long before I can apply for mortgage with updated info on credit repo

I agree with you 100%.  

 

Pay your parents back before you get a mortgage.  

Message 7 of 20
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Senior Contributor

Re: Paid off all my debts, how long before I can apply for mortgage with updated info on credit repo

I think DrJim gave some great advice.


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Message 8 of 20
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Regular Contributor

Re: Paid off all my debts, how long before I can apply for mortgage with updated info on credit repo

Personally, I think it depends on the relationship you have with your parents.  If you don't think this is going to become a problem, I wouldn't worry about paying them back before buying a house.  It just doesn't seem like that big of a deal to me (but I get along well with my mom).  I also would report the money they gave you as a gift, not a loan, but that's me. 

Message 9 of 20
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Regular Contributor

Re: Paid off all my debts, how long before I can apply for mortgage with updated info on credit repo


@DrJim wrote:

OK, I'm going to go a little different way with this, and hope it is accepted in the helpful spirit it is offered Smiley Happy

 

You really didn't pay off your debt, you consolidated your debt and got (hopefully) a low or no interest loan.  It may not show on your CR, but it does in your checkbook!  You have not really substantially changed your situation, you have simply made it look that way to lenders who pull your CR.

 

You don't want to buy a house and have a bunch of debt hanging over you - that will take all the joy out of home ownership.  I suggest you repay the loan to your folks, have some reserves and a good downpayment, then buy the house.

 

Again, I'm just trying to be helpful.  If I have misunderstood your situation, or if this is not helpful, just ignore me (like my wife does!)


Yep. And not all creditors report to the agencies each month either. My car reports 3 times a year.

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