"Consumers burdened by high-interest credit card debt or collections often struggle to qualify for mortgages, secure favorable terms and are at higher risk of foreclosure. Here's how debt reduction solutions can help: 1. Expand the qualified buyer pool Programs like structured debt repayment plans can rehabilitate credit profiles, helping near-miss applicants meet underwriting standards. 2. Accelerate the path to homeownership By reducing debt-to-income ratios and improving credit scores, these tools shorten the timeline from financial distress to mortgage readiness."
"Consumers with established credit and ample assets may turn to their preferred banks and credit unions to access loan and credit products, primarily: These loans combine multiple debts into a single paymentoften at a lower interest rate. Pros: Simplifies repayment with one monthly bill May reduce interest rates and total repayment costs Can improve credit utilization ratios Cons: Requires good credit for favorable terms Doesn't address underlying spending habits May extend repayment timelines"
Debt is a major barrier to affordable, sustainable homeownership, especially for younger adults. High-interest credit card debt and collections commonly prevent applicants from qualifying for mortgages, securing favorable terms, and increase foreclosure risk. Structured debt repayment plans can rehabilitate credit profiles and help near-miss applicants meet underwriting standards. Lowering debt-to-income ratios and improving credit scores shortens the timeline to mortgage readiness. Lenders and brokers can partner with debt-solution providers and fintech platforms to support clients who are not yet mortgage-ready. Debt solutions vary: debt consolidation loans simplify payments but often require good credit; home equity loans and HELOCs let homeowners tap equity with different trade-offs.
Read at www.housingwire.com
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