Pay Off Credit Cards Before a Mortgage? What to Know in Texas
Quick Answer: Paying off a credit card before you apply for a mortgage can help or hurt, depending on your numbers. Using your down payment savings to pay it off can leave you short at closing, and closing an old card can lower your score. Ask your loan officer before you act.
Can paying off a credit card help my mortgage application?
Sometimes. Lower balances can improve your credit score and your debt-to-income ratio, which compares your monthly debts to your monthly income. Both matter to a lender.
How can paying off a card hurt?
Using your down payment savings to pay a card can leave you short of cash at closing.
Closing an old card can shorten your credit history and lower your score.
What should I do first?
Ask your loan officer before you pay off or close anything. The right move depends on your balances, your score, and the savings you need for the home. I look at your cards and your plan together.
Frequently Asked Questions
Should I close my credit cards before applying for a mortgage?
Ask first. Closing an old card can lower your score. Your loan officer can tell you what makes sense for your file.
Should I use my savings to pay off my cards?
Not before you know what you need for your down payment and closing costs. Draining savings can leave you short.
Who can look at my cards and my plan together?
A loan officer who also knows the home side can do both. In Round Rock, text me PLAN.
Ai Tran, Realtor and Loan Officer
2020 Realty
Round Rock, TX
512-300-8611
https://www.AiTTran.com
Loan Factory, NMLS #320841
Ai Tran, Loan Officer, NMLS #2627075
Equal Housing Lender. This is not a commitment to lend. Subject to underwriting approval; not all applicants qualify.
Disclosures: loanfactory.com/aitran/disclosure | Texas: loanfactory.com/aitran/texas-disclosures
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About the author: Ai Tran is a bilingual Realtor and loan officer based in Round Rock, TX, serving Round Rock, Austin, Pflugerville, Leander, and Cedar Park. Through her One Desk Method she handles both the home and the loan, so buyers get the right house and the right financing from one person they trust. NMLS #2627075.
