Credit card debt can stall home purchase

Credit card debt prevents many consumers from buying a home, but help is available, according to Ronda Matthews, an agent at Prudential Americana Group, Realtors.

"While they can roll credit card debt into a mortgage on a refinance when they own a home, there's very little they can do when they're trying to purchase a home. There are ratios that they must be under, and when they are too high, there's nothing that can be done," Matthews said.

"We are seeing more people roll their credit card debt into their home. With this, their house payment will rise, but at a much lower rate than their credit card payments.

"In addition, they (may be able to) write off the interest from a house payment. Credit card interest, which can run as much as 21 percent annually, is not allowable as a tax deduction. And rather than paying several different sources every month, consumers channel their efforts into one payment."

Although this plan may allow some people to buy a home, they should still keep an eye on their debt.

"Unfortunately, we see way too many people getting themselves strapped by credit cards," Matthews said. "Rather than throw them in the garbage or use them sparingly, people will many times continue to let the debt rise. Before they know it, the interest charges are higher than the monthly payments, and they never get out from underneath the problem."

Matthews advises potential home buyers with credit problems to visit a qualified credit counselor.

"A good credit counselor can help get your life in order, so you can purchase something that will create equity," she said. "What happens is people get so caught up in this roller coaster, that they're buried in high-interest loans without realizing it."

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