Being a homeowner is a lengthy process. For most people, getting a loan from lenders is the best option. With this, there’s some screening done to ensure that the borrower is creditworthy before they can finance their home. A credit card statement is among the essential documents that lenders will ask the borrower to provide. Know more about Do Mortgage Lenders Check Credit Card Statement?
Mortgage loan applicants are required to submit a credit card report. This enables lenders to track normal credit patterns in order to assess the risk of providing a mortgage loan. They also look at credit reports to see what kind of purchases were made with credit and the overall borrower’s spending habits. Underwriters accept mortgages for applicants who use credit responsibly and make on-time credit payments on a regular basis, not just prior to applying for the loan.
Here are the things a person needs to know about providing a credit card statement to mortgage lenders.
The following are the things that mortgage lenders examine in the borrower’s credit card statement:
1. The Credit History
Credit history is documentation of how a person has previously handled credit. It includes debt load, credit lines held, and payment punctuality. For the lenders, history is not the only thing they look at. They will also pay special attention to the following:
- Outstanding debts
- Delinquent accounts
- Recent Credit applications
- Bankruptcy History
- Foreclosures
While some of these concerns may not be disqualifiers, they can have an impact on a person’s interest rate if they appear on their credit reports.
3. Revenue and Expenditure
If a person has a solid salary, the lender is less likely to consider them as a risk because they are more likely to be able to fulfil all of their monthly obligations. A high income, on the other hand, may not assist a person to receive a higher rate if their fixed expenditures are particularly high.
3. The Down Payment on the House
The lender’s risk is lower if the amount being borrowed is low. The lender is more likely to be generous with the interest rate if the borrower has a substantial down payment. If a borrower’s credit score is on the low side and they don’t qualify for a loan, a large down payment may be able to assist them to get accepted.
4. Borrower’s Liquid Assets
The borrower is expected to return the loan with their income, but some lenders may want to know if they have assets that can be liquefied fast in case the borrower loses their job or are unable to repay the loan in some other circumstances Lenders may perceive the borrower as less hazardous if they have liquid assets and may consider offering lower loan rate. In all essence, these assets act as security to the lender.
5. History of Employment
Yes, a borrower may be currently employed and able to get them good rates. However, the lender will look at the lender’s employment history in the previous years. They want to see the borrower’s ability to hold down a job. This helps them determine what monthly payments to set for the borrower. It also has an impact on the debtor’s loan interest rate.
Conclusion
Good credit statements reflect a huge aspect of the borrower to the lender. This covers overall, the credit credibility, the payment history, work history and borrower’s assets. Therefore, maintaining a good credit score is good for any borrower.
Anyone planning to be a future homeowner or take up a mortgage on a home should ensure they maintain a good credit score. Being a keen spender and clearing credit card loans in time could come in handy. Having savings and maintaining an employment status will increase the approval chances.
Overall, every borrower needs to make their financial picture to be as appealing as possible to the mortgage lenders. Good luck!
Frequently Asked Questions
If You do not Provide Credit Card Statement, Will it Affect Your Loan Application?
Yes! The lenders need the credit card statement to know the loan eligibility of the borrower. Since the credit card loans, default payments, credit card debts and payment history. So failure to offer this information reduces the chances of your loan being approved. The situation is different if the borrower has not applied for any credit cards, which affects the interest rates imposed by the lender on the borrower.
Are Credit Cards Used to Pay Mortgage?
Technically, a borrower can pay a mortgage using their credit card. However, the payment process can be straigneous. Most credit card companies do not enable you to pay your mortgage with a credit card. So a borrower needs to make a plan with the credit provider to be able to include mortgage payments into their credit card expenditure.
It is also worth noting that including mortgage payments into a credit card comes with some added fees and steps involved.
