Types of Debt That Can Affect Your Alaska Mortgage Approval
The summer season is upon us here in Alaska and with the market (and the weather!) beginning to heat up, many more buyers are out and about browsing available homes! But once you've found your dream home in Fairbanks, Anchorage, Eagle River, Wasilla, Palmer, or North Pole and you've moved on to applying for a mortgage, you may find that there is one factor that is stalling your loan approval— debt.
As we have mentioned in past blog posts, it's important to groom your credit score as much as possible before applying for a mortgage, but also to pay down high interest debt. There are a few common types of debt that will affect your mortgage approval and as your local real estate experts, we've listed them below!
Student loans—while considered unsecured debt—are not necessarily bad for your credit score if you always pay them on time and because they can take many years to pay off, they may actually help boost it. Just keep in mind these will play a part in your overall debt-to-income ratio (DTI) which lenders look at to determine your ability to take on a mortgage, so a larger loan may affect that outcome.
Auto loans are considered secured debt as the lender can repossess your vehicles if you don't pay them. Lenders may also look favorably upon these types of loans as they are more difficult to get than credit cards—showing you've already been approved for a harder loan—and can help to raise your score as they will show variety in the types of debt you have.
Also considered secured debt as the bank can take back your property should you not be able to pay, mortgages can be helpful to your score if paid on time. However, if it shows your previous mortgages were not paid on time or you missed a payment, lenders may be hesitant to approve you for another loan. Your debt-to-income ratio will be a determining factor if you're looking to take on a second mortgage.
You can count on Madden Real Estate to walk you through the buying process every step of the way, from finding your dream home to finding a lender and finally, arriving at the closing table! Give us a call today with any questions you have about the local market or purchasing an Alaskan home!
We even offer a Love It or Leave It Guarantee!