Can paying off your credit card debt help you qualify for a mortgage? Brian Wickert explains how recent policy revisions impact your debt’s effect on your mortgage qualifications.
In the not too distant past, the only kind of debt you could pay off in order to improve your qualifications for a mortgage were installment loans – things like car loans. But in the recent year or two, that policy has been liberalized. Now you can actually pay off credit card debt, still keep the account open and eliminate that payment from your debt to income ratio.
In other words, you can pay off credit card debt so you can afford to borrow more on your mortgage. Perhaps the larger question is, “Should you pay off credit card debt in order to qualify for a mortgage?”
The answer is very simple, but only if you’re not going to run that credit card balance back up. Period.
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