Planning to start shopping for my first property in February 2020 and I had a question about lender/mortgage approvals.
Long story short, I took out personal loan of $7,000 in July to cover some unforeseen expenses.
Will a lender see this amount (roughy $6,200 by February) and only allow me to use what I’ve saved up less $6,200?
So instead of $30k they’ll only allow $23.8k?
Thanks for your help.
It doesn't quite work like that, but close. A lender will see your assets and liabilities and make a total net worth calculation which they will factor in, but how they lend is more complicated than that and based on more metrics.
The cash flow calculation is likely the more important factor. Your income minus minimum debt service payments plus a living standard calculation to decide if you can handle the new payment to their guidelines. The rest of your credit worthiness status: credit history, experience, etc will determine how much variance they will make on that calculation.
Also remember that all banks are different so they each do things a bit different.
@Craig Risser Your best bet is to talk to a loan office at a bank. This will give you an idea of where you are at now and what you can do in the next few months to possibly improve your situation.