Definition of credit card and mortgage
Credit cards are issued by financial companies giving the holder ability to borrow money. They are charged interest and are often used for short term loans. You will be charged interest the first time you make a purchase but the borrowing limits are set according to the credit limits set for the individual. In most cases credit cards have a higher interest rate compared to other lines of credit and consumer loans. A mortgage on the other hand is secured by collateral of a specified real estate where the borrower is expected to pay back a predetermined set of payments. Businesses and individuals make use of this loan to buy real estate without paying the whole price up front. They are also known as claims on property or liens against property.
The importance of credit and mortgage
Getting credit and mortgage might be more challenging than just trying to get one on its own but it is however not impossible. There are two types of mortgages cash out refinancing and term refinancing. In cash out you can use the cash out cash to pay off a credit debt. This ensures the credit and mortgage are rolled together and the borrower ends up paying the interest rate on the mortgage and not the credit card interest rate. You should however note that by rolling your credit card debt into mortgage could reduce the amount of money you get when you sell the home.
Getting credit card and mortgage
The first step is to inform your lender that you want to get credit and mortgage the loan officer will then take your application and follow up on your credit report in order to view your financial condition. The next step is to let the loan officer know which credit and mortgage you want to incorporate and this will lead the loan officer into viewing your debt to income ratio.
It is important to pick a loan term that will work for you by understanding the interest rate. Getting a fixed interest rate will make sure your payment does not vary. When you go for a variable rate you would end up paying lower but this may not be the case all through because it would rise in future. You can come to a decision to go for a combination of a variable and fixed rate. The rates are fixed for a certain period then they become variable.
Before you get credit and mortgage it is important to review all the fees. If you get the loan make certain you fathom costs like appraisal fee, title search and points. Appraisals determine if you’re eligible to get the two together. You must double-check that the lender is paying the credit cards directly. You should not close your credit card account once it’s paid.
Tips to take note of
It is important to get the accurate payoff figure you can also merge your debt through a home equity loan and home equity line. You may be charged a prepayment penalty for the credit and mortgage even though you refinance.