Choosing to spend all your money each month will not only drain your bank account, but it can also have a negative effect on whether or not you can qualify for a mortgage. Spending habits do affect your chances of getting a mortgage.
Your past spending, saving and financing habits have the ability to boost your chances of securing a mortgage just as they have the capacity to demolish them as well.
Budgeting
If you aren’t one who typically uses a budget to keep track of your expenses each month, it might be a good time to consider trying one out if you are looking to take on a mortgage in the future. Knowing where your money ends up and being aware that your bank knows this information too is important to keep in mind.
Tip: Here is a good tool to help with this.
When determining if you are qualified to obtain a mortgage, banks check your credit report which includes your spending habits each and every month. Outstanding debts, excessive spending and having an unappealing debt-to-income ratio are all red flags when it comes to mortgage judgment.
Changing Habits
Maxed out credit cards from the shopping mall or online retailers are habits that will cause major bumps in the road to securing a mortgage. Although, if you’ve had a past that looks similar to this but have recently changed your habits, don’t worry too much.
Most banks typically look at your most recent two months of statements. This means that changing habits and sticking to a new routine of saving instead of spending will overall help your chances of obtaining a mortgage.
Past mistakes of poor budget choices won’t ruin your chances completely. It might take more effort to improve your statements and credit, but a mortgage won’t be absolutely out of the picture.
Think you have likable spending habits and want to start the process of securing a mortgage or need help getting on track? Contact us today.
