If you’re thinking about getting a personal loan but only recently bought a house, the first thing you should know is that there are no restrictions on this. There is no particular timeline that you should abide by before you can get a personal loan.
However, if you recently bought a house with a mortgage, you might have limited options. For starters, you should wait at least six months before getting a personal loan. Use that six months to develop a good mortgage payment behavior and a good credit score to increase your chances of getting approved.
While you can still get a personal loan immediately following a mortgage, there are a few things you need to consider. Moreover, these considerations may impact how much you borrow and the rate of interest you’ll get approved for.
Understanding Personal Loans
Personal loans are loans you take to fund anything you want to purchase. However, they are unsecured loans, and for that reason, they are considerably more expensive than other loan types.
What Are Your Options?
After buying a house, you are eligible to apply and get approved for a personal loan immediately. However, if you applied for a mortgage, then you have few options.
Your mortgage lender most likely performed a hard credit search on your profile before approving your application. That hard credit search is visible to others, including your personal loan lender. Furthermore, it can decrease your credit score, making it hard for you to get credit after getting the mortgage approved immediately.
If you went through automated decision underwriting instead of manual underwriting, your potential lender may spot a recent hard search on your credit profile and reject your application. That means it is in your best interest to find a personal loan lender willing to underwrite your application manually.
If you want to increase your chances of getting approved for a personal loan, you need to work on raising your credit score. Here are some tips:
- Do not miss credit repayments
- Maintain your credit utilization below 30%
- Avoid too many credit applications in a short period
- Avoid payday loans
- Get on the electoral roll
- Keep your credit accounts active for as long as you can manage
- Get a credit builder card or loan to show good credit repayment behavior
Debt to Income Ratio
A personal loan lender will also look at your debt to income ratio as part of your approval process. They need to ensure that you do not have too much debt that you cannot manage them well.
Other than that, they’ll also check your disposable income and determine whether you can afford personal loan repayments. They’ll also assess your debt to income ratio if they approve your personal loan using that data. If you fell above their debt to income ratio cap, then you’ll probably get approved.
Nothing should stop you from getting a personal loan right after buying a house as long as you fit the criteria your potential lender is looking for. As long as you can prove that you have good credit repayment behavior, a good credit score, and an excellent debt to income ratio, you’ll get your personal loan in no time.
At Opelika Finance, we believe in the value of solid relationships, and we approach lending through an understanding lens. We know how personal loans can be tough to get approved for, and that’s why we don’t turn applicants away based on past credit.
We are a ,local finance loan company in Opelika, AL, striving to make same-day loans from $200 to $1,500 with clear, straightforward repayment plans. If you want to apply for a loan, get in touch with us! We are eager to hear from you.