Lower Your Debt Before Buying Chicago Real Estate

chicago real estate mortgagesWhile carrying a lower debt load sounds like a good idea in general terms, for many who want to buy a new Chicago home, it’s also a necessity. Especially in light of the current mortgage industry troubles, lenders need to make sure their borrowers have the cash to make monthly payments on their homes, as well as the real estate taxes and required insurance. If you’re making too many other payments, there may not be enough extra cash to get the loan you want, even if you have a high credit score.
Equifax Personal Finance Blog recently took up the topic. In a post by real estate expert Ilyce Glink, potential homebuyers can read a horror story of sorts. It seems a homeowner with an excellent credit score wanted to refinance her home. She had 20 percent equity and a history of making payments on time. The problem? She was spending too much on her monthly payments, what with a new car loan, lingering student loans and credit card payments on top of her mortgage.
In the article, entitled “
Getting Rid of Debt Before Buying a Home,” Glink offers advice on eliminating or reducing your debt before you apply for a loan or refinance. She recommends starting with a realistic budget and knowing exactly how much you owe. Then, start paying on the highest interest rate loan first. This will net you the biggest return on your money. However, if you need a mental boost first, she says you may want to pay off your smallest loan right away instead. Then, put the amount you send that lender each month toward your more expensive loans.
When you’ve paid an account off, Glink says to keep it open. Having a high amount of available credit can boost your credit score. And while the Equifax article doesn’t say it, don’t forget to put those cards away! You’ll never pay them off if you keep using them.
For more ideas on positively impacting your credit score and on purchasing real estate, visit the
Equifax Personal Finance Blog.  If you have questions, the experts there are ready to help.