Suppose you plan to apply for a mortgage shortly but also considering taking out a personal loan for another purpose. In that case, there are things to know about how personal loans and mortgages interact with one another and if a personal loan will impact your finances positively or negatively.
So, what are personal loans? Personal loans are borrowed funds that can be used to pay for things like a wedding, vacation, home repair or improvement, or a medical bill for you or a pet.
When you apply for a mortgage, the lender looks at your financial picture. That picture includes your credit history, credit score, and any other debt you might have. If you have a personal loan, the lender will examine the loan amount, your income, and other debt and if you’ve made regular, on-time payments.
Perhaps you’re buying land with a personal loan and are now ready to build but need to take out a mortgage loan. Having a loan for the land purchase may have been necessary, but there are benefits and risks of personal loans, and they may impact a home mortgage loan.
Your personal loan history and the amount of money you owe in personal loan debt can affect your ability to get a mortgage. Here’s how they play a part: Credit Score, Payment History, Payment History
You may want to consider some tips when learning what is needed to buy a house, how to expedite the application process, and make the path to your goal — getting a mortgage — just a little smoother.
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