Mortgage Credit Card Debt

My credit score is about 605. I have several credit cards with balances near the limits (about $45k), but no other credit problems. My wife's credit score is about 640, with little debt, but some delinquent accounts from a few years ago. If my wife got a personal loan for, say, half of my credit card debt, how long would it be before my credit score went up, and how much would it be likely to go up? We want to buy a house soon (next month or two); would it be better to apply for a mortgage now on my wife's credit, or try to get my credit score up?
Montly income (gross): $7300
My wife's delinquent accounts are paid, they're just still on her credit report. All of her recent accounts are up-to-date.

You do not say what your monthly income is. Mortgage companies look to debt ratios to determine your ability to repay. Thus, you need to take your total monthly obligations and divide by your total monthly income in order to determine your debt ration. Include your prospective mortgage payement in this calculation.

Even if your debt ratio is too high, you should be able to purchase a house together. The way to do this is to have only your wife on the Note and both of you on the mortgage. This is not an uncommon occurrence and most mortgage companies will allow it. If yours doesn't , shop around.

Good luck.

2007-04-02 04:17:32 by Stephen C

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Hoping to buy a home soon - we need to qualify for 145k. Is it possible when we have 6k in credit card debt (payments $200/mo) and a $320 monthly car payment? Combined we make $5200/month (gross)... His credit score is 650 and mine is 775... Any insight is much appreciated!

It all has to do with your debt to income ratio. Different lending institutions use different methods to calculate this. Usually it's around 35%-40% of your net pay, meaning add up your monthly payments for all debt, not utilities, and compare this sum against 35-40% of your net pay. If you already exceed this amount, you will be overextended. Ever how much below this amount is how much room you have for your new home monthly payment.

2008-04-16 16:27:48 by niccoconuts332

Price: $8.95

I have approximately £800 on a credit card as outstanding debt, yet I want to apply for a mortgage, I have a decent deposit. Will the outstanding credit card debt prevent me from getting a mortgage?

You credit rating is not assessed on the amount you currently owe. In fact if you have payed your instalments on time and without default it will help you. The mortgage firm will take the outstanding debt into account and will need to know the repayment figure when agreeing your loan. But if your deposit meets their criteria as does the rest of your circumstances there should be no problem.
Incidentally you should always shop around for a mortgage offer as they do vary quite a bit in interest and conditions from firm to firm.

2009-06-06 11:08:00 by Charles

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I want to know if the law provides for a way to erase credit card debt legally, and if there is a legal way to erase a home mortgage.

You can look into filing bankruptcy. It will be a huge negative mark on your credit report and can remain for up to 10 years. However you can still get credit after your bankruptcy. It will be harder, but not impossible.

2008-10-09 20:56:34 by boots

Why on earth would anyone run up credit card debt unless a person was in desperate need of basics like food, shelter, paying medical bills, etc? Or buy a house with a mortgage they can't afford? I don't "buy" the argument that people are 'tricked' into taking out an egregious mortgage or not understanding credit card interest rates. If anyone is so ignorant about such things, they should be taking a class in basic life skills before anything else. Additionally, every community that I know of has a free legal or para-legal service that will take a look at a mortgage document. I have a credit card for one reason: if I need to rent a car (which I've maybe done 3 times in the past five years) you HAVE to have a credit card--Are people suckers, in denial, tricked into thinking 'stuff' will make them happy, I don't get it. I really don't. Just how much personal debt accrues from buying 'luxuries' vs. basic necessities?
Just wanted to add that I completely understand if someone is economically distressed that he/she would use credit cards just to get by. I'm talking about using them frivolously without thinking of the consequences.

There are a lot of factors at work here. First of all, yes, a lot of people get a credit card or mortgage without really understanding what it is. And yes, they should learn about something before they do it, but no one is requiring them to. The credit card company doesn't make you take a test about responsible use before they give you one - they just ask for your address and social security number. Mortgages are a little more complex, but again, the bank is only interested in selling you the product, not whether it's a good idea for you to get it. (Although they're a bit more cautious now than a few years ago.)

Secondly, when we're talking about credit cards, there are a lot of psychological factors at work. There have been a lot of studies that show that for some people, credit cards cause them to spend more, because there's a psychological disconnect between swiping the credit card and the money spent. And of course, the card is designed to help you spend more than you have, since there's a "minimum payment" that makes you think "I can have all this stuff for only $50 per month!"

But beyond that, there is a sense of entitlement. Because people have the ability to buy something, they believe that they not only should, but that they deserve to. Even though the real truth is that you don't "deserve" anything unless you have a cash to buy it.

I had credit card debt for a few years, and it was a snowball effect. I was in college, and didn't have enough money to pay for my supplies. So I put it on my credit card because I thought, "Nothing's more important than my education, right? I'll pay it off over the summer!" But once I was carrying a balance, I started justifying buying pizza and movie tickets with my credit card too. And then a digital camera. And other little stuff. Oh, and plane tickets because I had to see my boyfriend. It sounds really silly now, but at the time, it all made perfect sense. I mean, as long as I can make the minimum payment, I was okay, right? Wrong.

Things are much better now that I've paid off my credit card and learned my lesson. But I really understand how things can snowball out of control, as well.

2009-04-14 19:49:15 by holacarinados