Three Ways To Work Around Debt When Qualifying For A Mortgage
There are many prerequisites when applying for a mortgage and meeting all of them is often essential if you want to qualify for financing. One primary prerequisite is low debt levels. Lenders need to know that you are capable of paying off the money you borrow from them, and they verify this by checking the amount of debt you currently hold. Elevated debt levels generally mean that your monthly expenses or payments are already high, which could limit your ability to repay them. This, in turn, may hinder your ability to qualify for a mortgage as most lenders are often concerned with limiting their own risk when lending money.
If you’re experiencing disqualification due to high debt, mortgage expert Jordan St. Pierre at The Mortgage Centre has three steps you can follow to reduce your debt load and monthly payments. This can help you acquire the mortgage you need to purchase the home of your dreams.
1. Look at restructuring your debts
This step is ideal for reducing your debt levels and monthly payments, which could then help you qualify with lenders. In addition, if there are items that are revolving pieces of credit, such as credit cards or lines of credit, which are qualified at 3% of the balance as monthly payment, a consolidation loan can reduce the monthly payment or qualifying payment. When consolidating your debt, it can also be an excellent time to reduce or re-write your current loans (e.g., vehicle loans) to extend the amortization and lower your monthly payments.
2. Have family help you with your payments
Another solution to elevated debts is to ask your family for help. If you are lucky enough to have a family member that would be willing to give you a gift and pay the debt out, use this option. Paying out the debt will alleviate the problem entirely.
3. Get a cashback mortgage
The third solution is to get a cashback mortgage and utilize the cashback proceeds to pay down debts to get qualifying numbers in-line. To acquire a cashback mortgage, talk to your mortgage broker so you are aware of your options and the terms and conditions of these mortgages.
Another alternative you have is to pay down your debts with time or from your own proceeds. If you can manage this, it will be easier to qualify for the mortgage you need.
For more tips on how to improve your chances of acquiring a mortgage, reach out to Jordan St. Pierre at The Mortgage Centre. I am a mortgage broker serving Edmonton, Spruce Grove, Stony Plain, St. Albert, Devon and surrounding areas. I have the skills and resources to help you obtain mortgage financing for your specific needs, goals, and future plans. I also guide you through the mortgage process and offer advice to help you choose the right product for your requirements.