Don’t buy that…. yet!
While a “0% Financing” or “No payments for 12 months!” sale might seem like perfect timing, it could destroy any hopes of buying a home soon.
Your maximum mortgage is affected by all debts, including unpaid credit cards, car loans, even deferred payments. A $100 monthly debt can reduce your buying power by nearly $17,000 under today’s mortgage rules. A $600 truck payment cancels approximately $100,000!
Even if your actual obligations are $0 or interest-only for the first year, or if the loan term is less than the mortgage term, mortgage qualification rules treat them as real principal and interest payments starting day one.
This means that sometimes, a smaller downpayment after paying off strategic debts can actually get you a bigger mortgage than if you left the debts in place and used all your savings for a larger downpayment.
Get prequalified with a mortgage broker early to know your options and help put a plan in place if existing debt needs to be managed. As for that new fridge or car, hold off on those purchases to be sure you get the kitchen and driveway to put them in.
Its free, so call or email today 250-550-8272.