What Factors Affect Your Ability to Get a Home Loan?

Could a New Car Affect Mortgage Lending?As Americans are carrying an increased debt load outside of their mortgages, it is becoming a concerning factor for mortgage lenders. While cars and other expenses are necessary, the overwhelming financial responsibility has been proven by researchers to affect lenders’ decisions. Whether you are looking to refinance your home or move into a new one, CT Homeowners Insurance should be carried to protect your investment.

Black Knight Financial Services, an analytics and technology company who focuses on the mortgage industry, reports that homeowners’ personal outside debt has reached its highest peak in 10 years, 81 percent of which is due to auto loans. The car industry is booming with an average sale price of $33,560, as reported by Kelly Blue Book Research. However, attractive loan rates have caused an influx of car loan debt for consumers.

Another contributing factor is student loan debt as the balances have increased upwards of 55 percent since 2006. What’s more, credit card debt plays another role in eating up homeowner’s monthly budgets. On average, homeowners owe $8,684, according to Black Knight.

Homeowners who received financial assistance through the Federal Housing Administration (FHA) and Veteran’s Affairs (VA) tend to have higher debt than those who carry typical Fannie Mae and Freddie Mac financing, as well. For example, those who borrowed from the FHA or VA typically have lower credit scores and make smaller down payments, carrying an average $29,415 of debt. Contrarily, those homeowners with conventional loans only carried an average of $22,414 in debt.

Bruce McClary, vice president at the National Foundation for Credit Counseling stated “Some people have lost sight of the ground rules for responsible credit and are pushing the boundaries.” As a general rule, he recommends that auto loans not exceed 15 to 20 percent of total household income.

Although debt has undoubtedly increased in recent years, experts say there isn’t any evidence of mortgage payment struggle. However, homeowners will have less wiggle room when it comes to finances as a result of all the debt. As debt-to-income ratios affect lender’s decisions, experts recommend that mortgages and other obligations do not exceed 45 percent of your income. In turn, homeowners who follow this rule and who are in good credit standing are less likely to be turned down by lenders.

At Byrnes Agency, we have over eighty years of experience in the insurance industry. We are experts in providing custom tailored policies to safeguard your largest investment: your home. For more information on how to properly protect your property and assets, contact us today at one of our three locations.

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Dayville Office

Phone: (860) 774-8549
394 Lake Rd
Dayville, CT 06241
United States
info@byrnesagency.com
Hours of Operation: Monday- Friday 9:00am-5:00pm

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Norwich Office

Phone: (860) 886-5498
6 Consumers Avenue
Norwich, CT 06360
United States
info@byrnesagency.com
Hours of Operation: Monday- Friday 9:00am-5:00pm

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Woodstock Office

Phone: (860) 928-7928
1226 Connecticut 169
Woodstock, CT 06281
United States
info@byrnesagency.com
Hours of Operation: Monday- Friday 9:00am-5:00pm

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