Revolving Credit vs Installment Credit & Mortgage Approv

jmnjon · Joined: 28 Sep 2009 Posts: 2

Hello,
I currently have 15k on a single revolving credit account(visa) and am going to be trying to get a mortgage on a second home in the new year. I was wondering is it better to have a balance on a revolving account or a installment account when applying for the mortgage. I am thinking of selling my truck(which is paid for) in order to payoff the credit card balance then in turn lease a vehicle with much lower mo payment. Our credit scores are both in the 800 range and we have about 15% down on a 300k mortgage. Our current home we plan on renting out. Can a mortgage guru please advice which route would be better? Should i stay with the 15k revolving balance or get a 15k installment balance?
Thanks in advance

EricJ · Joined: 09 Jan 2009 Posts: 321 Location: New Jersey

Ultimately, what you want is to go into the mortgage process with the lowest monthly payments on all other items as possible.

jmnjon · Joined: 28 Sep 2009 Posts: 2

Thanks for the advice. Another concern that i have is our current home is worth less than what we owe, if we are making enough to cover both mortgages will it be a problem securing the new morgage?

m2c · Joined: 03 Aug 2005 Posts: 937

I don’t mean to impune your integrity but you should be prepared for some questions at loan applications. FHA is only one to directly confront the issue but Google “buy and bail mortgage fraud” and you’ll understand what’s in the back of LO’s mind. Good counter to this subliminal feeling is to expand on documenting all your liquid assets accounts. If you’re carrying the freight on $15K in credit card debt, there may not be too many such assets to list.

Not a "brick wall" to a new mortgage but a big caution flag.