Mortgage - Home Mortgage

Mortgage Rate
Home Mortgage Debt

The amount of debt that you have can affect your ability to get a home mortgage. Debt can also affect the interest rate you’ll pay, the terms of the mortgage and the amount of a mortgage you can qualify for.

Those who have a lot of debt will probably have a harder time getting a mortgage and have to pay higher interest rates. Therefore it’s a good idea for people who have a lot of credit card and other debt to reduce the amount of debt they have before applying for a mortgage.

Mortgage lenders will be less likely to lend to a person with debt because the person’s liabilities could affect their ability to pay the mortgage off. Large amounts of unpaid credit card or student loan debt can also lower your credit score which also affects your ability to get a mortgage.

How to Reduce Debt 

Reducing debt can be very hard, especially for those with limited incomes or lots of debt. The easiest way to reduce is also the best; simply pay the debt off.

One way to pay debt off is to simply pay small debts off first then move onto larger debts. A good way to do this would be to sort your credit card bills and pay off the smallest balance first. You should not neglect your other credit cards while doing this. Make sure you make at least the minimum payment on those cards.

If your debts are too high to pay you should contact the creditors and talk to them. Ask them if it is possible to eliminate the debt by paying off a lower amount. You can also get the minimum payment reduced. Creditors will be willing to work with you because they’ll make more money by getting you on a repayment plan than referring you to collections.

Don’t Increase Your Debt

At the same you are reducing your debt you should take efforts not to increase your debt. One way to do this is to cut up your credit cards. Another is to take your credit cards out of your wallet and put them in the drawer for use in an emergency situation.

Try living on a budget and reducing your expenditures. This could mean clipping coupons, shopping at discount stores and bringing your own lunch to work. It could simply mean not buying more than you can afford to.

One habit to get into is saving money. Having a savings that you can use to cover emergency expenditures can eliminate the need for credit card use. This means that you should get into the habit of saving money and keep saving money.

Mortgage Equals Debt

One thing that everybody who takes out a mortgage should remember is that a mortgage is a debt. If you have a $200,000 mortgage you are $200,000 in debt. When you take out a mortgage you increase the amount of debt you owe.

Nobody should take out a mortgage unless they are prepared to go into debt for the amount of the mortgage. Even though the sale of the house can theoretically pay off the mortgage, homebuyers should remember that they may not be able to sell the home.

Homebuyers should also be aware of the possibility that home prices could fall. This means that the sales price of the home could be below the principal of the mortgage. In such  a situation the mortgage holder would still owe money on the mortgage.