Bring on the Debt! Florida Home Loan Lenders Look for Solid Credit Score

Yes, you’re reading this correctly: a little bit of debt can be a very good thing. Why is this the case? Why would you ever choose to owe money? Because it will prove to lenders that you’re a solid candidate for a Florida home loan. Allow us to explain …

Lenders rely on a credit report to decide whether to give you money, to determine the interest rate they will charge you and to establish your automobile or home insurance premium. If you have no track record demonstrating that you repay your debts, you may not qualify for a Florit home mortgage loan.

Simply put: you need to prove you are a responsible consumers in order to be approved for any Florida home loans. How else can this be accomplished unless you have a history of paying off debts?

Florida home loan approval: The importance of your debt ratio

The less money you owe, the better. Your debt ratio should be no more than 40 percent of your take-home income. If you and your partner take home $5,000 per month, for example, potential creditors prefer that your debt repayments, including your Florida mortgage payments, be no higher than $2,000 per month.

With this in mind, let’s actually go over loans that would appeal to creditors, those that make you more likely to receive lowered Florida home loan rates:

- A mortgage: Can look good to potential creditors, as long as you’ve kept up your payments. As an added bonus, the interest on mortgage payments may be tax-deductible. Moreover, hopefully, real estate is an asset that will appreciate in value.

- Car loans: Will not harm your credit rating provided you shop around for a reasonable interest rate. But it pays to keep in mind that a car is an asset that tends to depreciate in value the minute you drive it off the lot. Hence, the reason why a Florida home equity loan is often recommended instead.

- Bank loans: Won’t hurt your credit rating as long as you repay them regularly and on time. If you borrow to pay for your education, it’s assumed you’ll get the money back in the form of a better salary.

- Credit cards: Can be a good thing in the eyes of creditors, as long as you make regular payments. Creditors don’t like to see you carrying a credit card balance of more than 80 percent of your available limit.

Overall, you don’t wish to accumulate very high balances. We suggest using home equity to alleviate many debt concerns. But before you enter into the Florida mortgage loan process, you will need to show that you possess a reliable payment history in some way.