Will a payday loan prevent me from buying a house?
I have a reoccurring payday loan now for several months and will for the next few months. Every 2 weeks I will take $300.00 withdraw it from my bank account and take out a $250.00 payday loan then re-deposit the $250.00. I keep a high enough balance in my account overall so my overall account balance should not be too low. Yes I know payday loans are stupid but what impact if any will this have on my chances of getting approved for a house?
It never shows as a payday loan on my account a simple but instead as a withdraw of about $300.00 cash and a few hours later a redeposit of $250.00 cash.
- SlumlordLv 78 months agoFavourite answer
The lender will make you explain what these transactions are and they are going to figure it out. They will probably decide that anyone who needs to take out a payday loan every month is going to have a lot of trouble paying their mortgage and they probably won'g give you the loan, unless you have a really good explanation for all this. I suggest you get your finances together enough that you don't need to do this. Give it 3 months or more and then go apply for the loan.
- Beverly SLv 78 months ago
A mortgage lender has to prove where deposits (other than payroll) come from. So they will want documentation of where the $300.00 deposit every 2 weeks is coming from. You will have to show them the paperwork. A payday loan won't cause you not to be approved just because it's a payday loan. However, the amount you actually have to PAY every 2 weeks will be included in your debt to income ratio and may cause it to be too high to qualify for the mortgage. I would try to pay it off before applying.Source(s): Mortgage lender 33 years.
- WhoLv 78 months ago
so let me get this straight
you take out 300 from your bank - THEN you get a 250 payday loan THEN you pay that 250 into your bank account -
Is this correct?
Are you insane?
So you now got 250 in your bank 50 in your pocket BUT owe on a 250 payday loan
When the f//k do you repay the payday loan and where do you get the money from to repay it? Cos you no loan is ever "free" no matter how long you borrow it for - say borrowing that 250 costs you 10 - THAT means you gotta repay 260 not 250
And NO payday loan company is just gonna keep lending you money without you actually repaying them or paying off LOADS in loan charges each month
you take out 300 from your bank - THEN you get a 250 payday loan THEN you repay the 250 payday loan - BUT as before no loan is ever free so you MUST repay more than 250 - say 260
So in both cases you just moving the money around is gonna cost you £10 every 2 weeks - (or $260 every year) with absolutely NO benefit to you
you just GOTTA be insane to do this
(payday loans are not a good idea - but in certain circumstances can be necessary - THEY aint always stupid but YOU are)
(but than again I dont actually believe your story)
- SumDudeLv 78 months ago
Sounds like your financial ignorance will keep you away from buying a house.
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- Anonymous8 months ago
Yes it will !Only broke poor people get payday loans and car title loans.
- Anonymous8 months ago
Someone desperate enough to take out payday loans isn't anywhere near ready to buy a house....dream on.
- Anonymous8 months ago
You won't qualify to buy a house. If you had a brain you would know that.
- 8 months ago
Whilst your payday loan does not show on your account, it will certainly show up on your credit report. You do not explain why you are doing this, payday loans have extortionate rates of interest. Banks will not like this. If you are borrowing this money only for a few hours, just adjust your spending so that you stop doing that. There is always stuff that can be cut out of a budget; getting rid of the cable and moving your cellphone onto a pay as you go contract may be enough. Taking a sandwich to work for lunch can save you almost $3,000 a year.
Then concentrate on improving your credit score. If it is below 700 you are not going to be able to borrow money meaning you will need to pay cash for the house.
- Mr. SmartypantsLv 78 months ago
When we bought our house, I had never been in debt my whole life. I had no credit rating whatsoever. I thought I'd never be able to buy a house. But the real estate guy said it was no problem.
If you put 20% down on a house, the bank feels safe. You can't disappear and take a house with you. If you don't pay, they can take it back. They know exactly where it is! If you already put down 20%, they won't lose any money on it if you stop paying (or can't pay).
And I'm sure they're also thinking that someone who's saved up 20% of the cost of a house is going to be pretty frugal. It takes some discipline.
- Elaine MLv 78 months ago
A bank looks at your total savings before giving you a mortgage. You need at lest 20% of the total cost of the house already 'saved' .