How to keep credit card reform from blocking your mortgage

credit card use could affect mortgage availabilitySome experts believe an unintended consequence of credit card reform in the Credit Card Accountability Responsibility and Disclosure (CARD) Act may be to actually make it more difficult for a potential homeowner to get a mortgage loan.

Heavy Hammer, Inc. is an "online networking and consulting company" that specializes in connecting homeowners with various experts. CEO Michael Urbanski, on the company's Web site, says, "As well intended as the CARD Act may have been, it is proving to be yet another nail in the coffin for the housing industry. When an interest payment increases from eight to 16 percent, the minimum monthly payment is effectively doubled for the card holder with devastating consequences for future mortgage eligibility."

Urbanski's concerns are mostly for the bigger picture: housing recovery. He does point out, however, that minimum monthly credit card payments "are weighed with increasing importance by lenders," who must decide whether you are a good mortgage risk.

Of course, we are still early in the game, and many of these concerns some experts are expressing are somewhat hypothetical at this point. Nevertheless, if you are thinking about buying a home it certainly can't hurt to try to make yourself a more attractive mortgage "bet" to a lender.

How? Let's say you are one of those people whose credit card rates have just been raised and your credit limit lowered. The key here is to try to get your bank or credit union to either lower your interest rate back down, increase your credit line as close as possible to where it stood in previous months, or, best case scenario, both.

Difficult, granted. But not impossible.

In fact, speaking to the Associated Press recently, Andy Rowe, an executive vice president with Bank of America's card business, gave a pretty good clue how to accomplish this: Said Rowe, " What we want is a deeper relationship with our customers." He told the Associate Press that customers who stick with a single bank (of course, he meant BOFA) may be able to get annual fees waived or, better yet, interest rates lowered. "That's where the competition will be," he said.

In other words, the more business you do with one lending institution, the better the odds you may be able to improve your credit profile, and your ability to get that mortgage.

Keep your eye on the bigger prize; getting that mortgage for your dream house. Now, I know many of you are loath to put all your eggs in one basket and prefer having a credit card with one bank, say, and a checking and/or savings account with another. If you are not thinking about home buying and securing a mortgage right now, there is nothing really wrong with that approach.

However, if you are contemplating home ownership and, hence, a mortgage loan at good rates, this is probably a good time to consolidate your banking business all under one roof. You should become a far more desirable customer to the bank and just may end up getting that mortgage while increasing your credit line and lowering your card rates all at the same time.

Of course, should this not happen, you can always take all that banking business of yours and put it under the roof of a different bank or credit union.

Charles Feldman is a journalist, media consultant and co-author of the book, "No Time To Think-The Menace of Media Speed and the 24-hour News Cycle." He has written about real estate related issues for several years.
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