These days, many aspects influence your mortgage’s application. Your credit score is the most important. There have been numerous articles on credit scores and the factors that affect them.
You can leverage other loan types to boost your chances of a favorable mortgage from a Salt Lake City lender like American Loans. Three loan categories have a significant impact on your mortgage application.
These are a form of unsecured loans. They will not negatively affect your application as long as you repay them on time. They will boost your credit score if repaid on time since they have extended loan terms. A student loan, however, affects your debt-to-income percentage, and this might increase your mortgage’s interest or lower its principal minimally.
Auto loans are secured because your car is used as the collateral. In most instances, an auto loan will increase your credit score because it diversifies your debt. Mortgage lenders also favor people with auto loans since these are challenging to qualify for, unlike most options.
Most payday loans do not usually reflect on your credit report. However, if you default on any of the repayment, the loan can significantly dent your credit score. Payday loans often come with high interest rates, and it is advisable to avoid them altogether if possible.
In the end, you now understand that different loan types will influence your mortgage application. Anyone dreaming of home ownership in the future should be diligent when applying for any loan. Most mortgage lenders you will come across also give favorable loan terms to applicants who maintain debt-to-income ratios of below 40%.