Home Buying in 29440>Question Details

Ms. Lewis, Home Buyer in 29440

Does all outstanding debts need to be paid off prior to purchasing a new home?

Asked by Ms. Lewis, 29440 Tue Jun 29, 2010

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Answers

6
No, but it is a good idea to try and pay off debt before buying a home, as the mortgage payments can weigh you down at times.....The typical loan consists of 15 or 30 years. Most choose the latter because the monthly payments are much more attractive. But if you think about the probability of holding the same job ie.. Income for 30 years, 15 would be more practical, especially at today's rates.
0 votes Thank Flag Link Mon Jan 21, 2013
only if your debts are too high and the lender financing you requires it to lower your debt to income ratio.
0 votes Thank Flag Link Sun Aug 15, 2010
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
Contact
NO NO NO... In fact, right now, if you wanted to go with an FHA loan (the 3.5 % down payment option), FHA requires for you to have THREE (3) Open Lines of Credit!!!!! I know it sounds crazy, but its true.
Someone that owes ZERO will have more trouble getting a loan that someone who OWES MONEY!
0 votes Thank Flag Link Sat Aug 14, 2010
It will depend on multiple factors (i,e, your FICO score, your debt to income ratio, major purchases recently made etc.). I would recommend you contact a mortgage advisor that has an established record to let you know what your financial position is.

All the best!
0 votes Thank Flag Link Tue Jun 29, 2010
No. Some debt is OK but your earnings have to be high enough to service them Bankers look at your income and your debt. Your PITI/Income ratio (that is Principal+Interest+Tax+Insurance Payment) should meet or better 28% in most cases. PITI+Other Monthly Debt/Income should meet or better 36% in most cases. There are a number of free calculators to help you figure your ratios online.

Hope this helps!
0 votes Thank Flag Link Tue Jun 29, 2010
While each situation is different, most of the time the answer is no.

Many times paying off outstanding debts could make getting a loan more difficult. Issues such as cash reserves remaining after closing could become an issue.

Your best bet would be to consult a trusted mortgage adviser and have them give you advice based on your individual situation. Let me know if you need a referral to someone I trust that can help you.
0 votes Thank Flag Link Tue Jun 29, 2010
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