Can Online Gambling Affect Getting A Mortgage
Gambling can affect anyone and can quickly become out of control. If you have any concerns that gambling is affecting your finances, or that of a family member or friend, we can help with our range of tools and tips. Online tools to support you. For instance, data show that mortgage rates can vary between lenders by.25 percent (conforming) to.50 percent (non-conforming) on any given day for the same loan. That dwarfs a.125 percent.
Back taxes = no mortgage (until now)
The additional problem with factoring gambling risk is that it is the nature of gamblers that losses spiral and can easily reach loss levels that make meeting loan obligations an issue. There are state lotteries that 18 year-olds can play, and some casinos have an 18+ policy on poker, but the real cause has been the rise of online gambling. The Unlawful Internet Gambling Act of 2006 tried to restrict online gambling, targeting poker sites such as PokerStars, Absolute Poker and Full Tilt Poker.
If you are paying back taxes with an installment plan, most mortgage programs required you to clear your tax debt before getting a mortgage. Until today.
Verify your new rate (Dec 18th, 2020)Fannie Mae clears the way
Mortgage giant Fannie Mae sent out an update today to its lenders allowing them to approve applicants who owe back taxes. The change is effective immediately.
You don’t have to clear your tax debt before buying or refinancing a home. However, you do have to meet a couple of criteria:
- The lender must document that you have an approved IRS installment agreement in place. It must indicate the terms of repayment, including the monthly payment amount and total amount due.
- In addition, you must be current on your monthly installments. You can prove this by supplying the most recent payment reminder from the IRS. That will show the last payment amount and date, and the next payment amount owed and due date.
Finally, you cannot have an IRS lien on your home. That’s what happens when you ignore tax debt or fail to set up or stick to a repayment plan. The IRS liens your home, and to lenders it appears that the only reason you are making installment payments now is that the IRS forced you to.
Payments count
Your lender won’t completely ignore your IRS obligation, however. Your monthly payment will be included in your debt-to-income ratio (DTI), which could reduce what you’re allowed to borrow.
For instance, 43 percent is a common threshold for mortgage programs: below 43 percent is good, above 43 percent is bad. So if you earn $5,000 a month and make a $300 a month tax payment, at a 4 percent rate, you could borrow almost $63,000 less with the tax lien than without it.
Practical matters.
If you plan to buy or refinance a house while repaying back taxes, it might help to negotiate a lower monthly payment and longer repayment period with the IRS. That way, you’ll qualify for more financing if you need it.
Alternatively, go for the highest payment you can possibly make, pay that thing off as fast as possible, and apply for your next mortgage with a clean slate.
What are today’s mortgage rates?
Current mortgage rates are significantly higher than they were a couple of weeks ago. However, understand that you can offset some of that increase by shopping aggressively for your home loan.
For instance, data show that mortgage rates can vary between lenders by .25 percent (conforming) to .50 percent (non-conforming) on any given day for the same loan. That dwarfs a .125 percent increase in overall rates. It pays to shop, and that’s easy to do right here.
Verify your new rate (Dec 18th, 2020)
Applying for a mortgage can be a tricky process for anybody, no matter what their age or financial situation. There are multiple factors that can affect a mortgage application, some of which you may not have considered previously.
One of the first things a lender will look at is your credit score. Again, this can be affected by various circumstances, but you may not have considered that a leisurely gambling habit could have its own consequences.
The mortgage application process
When you first apply for a mortgage, your chosen lender will assess your household income including your basic salary plus any extra income such as freelancing or benefits.
During this process, the lender will ask for documentation of your bank accounts, including copies of your statements for the past three to six months. Here, they'll be able to see your regular transactions, so it’s wise to keep an eye on your deposits if you’re a regular player.
Will online banking deposits affect my application process?
There is no clear-cut answer for whether or not a mortgage lender will refuse to lend you money based upon your gambling deposits. However, if they can see regular payments into online gambling operator accounts, these may present a cause for concern.
Why lenders have to look into your spending habits
The mortgage lending process has not always been so strict, but as most of us will recall from the credit crunch of 2007, being lenient can have its setbacks.
In 2014 and later in 2017, regulations were introduced for lenders which meant that they had to assess the affordability of a loan in much more detail. This included the aforementioned review of transactions – regular online gambling payments have been known to make lenders think twice.
Why gambling may deter lenders
Mortgage lenders don't pass judgement on applicants – they merely need to assess the risk of lending out thousands of pounds at a time.
However, statistically speaking, “problem” gamblers have less chance of having a healthy savings account, which in turn will affect the amount to which they can put towards a deposit and ultimately influence the outcome of their application.
There is no need for doom and gloom, however, as the majority of gamblers are not problem gamblers and just like to indulge in an occasional fun habit. Keep an eye out for any of these signs if you’re thinking of applying for a mortgage any time soon:
Spending less time with family and friends, and more time gambling
Depositing more money than you can reasonably afford
‘Chasing’ bets to recover losses
Losing enjoyment in gambling
To stay on the safe side when it comes to impressing mortgage lenders, there are a few pointers that you can bear in mind.
Improving your credit score
A credit score is a rating out of 1,000 (sometimes it can be out of 700) that determines your reliability as a person with credit. Personal wealth has no bearing on this. Instead, it is actually better to accumulate a small amount of debt, for example, a mobile phone bill, and continue paying this off in regular instalments to prove that you can maintain regular payments.
The beauty of a credit score is that it changes month by month – sometimes for better, sometimes for worse! You may find that “silly” things, such as small expenses like taking out a new mobile phone contract, affect your score by a few points.
However, your score can also increase over time. Sometimes this happens naturally as time wears on, for example, if you carry on paying off regular payments such as credit card bills.
You can also improve your credit score by paying off any old debts you might have. So, if you have an old store card that could do with knocking on the head, try taking a little out of your savings – your credit score will appreciate it.
Stop gambling
This is, of course, the last resort for those whose gambling deposits may look unfavourable on a mortgage application. However, as mentioned above, credit scores can improve over time, so if you need to tone down the gaming for a few months, it might be a worthwhile investment in the future.
If you’re not sure how to limit yourself when it comes to gambling, you can try out several different methods including a ‘time out’ or even self-exclusion, which can freeze your accounts for up to six months.
Set up a new bank account
If you’re not ready to stop gambling altogether, then your mortgage lender only needs to assess the accounts from which you make regular payments – for example, bills and taking wages. You're within your rights to set up a new bank account or to simply use an existing one which may be inactive.
Be careful, however – you need to monitor this bank account just as much as you would your main accounts. Transactions are still being made, so you should still keep a keen eye on your spending.
Can Online Gambling Affect Getting A Mortgage Loan
What not to do
Believe that winning at online gambling will satisfy a mortgage lender
Just because the money you’ve invested in gambling is going back into your account, does not mean that mortgage lenders will class this as a reliable source of income!
Take out a loan to pay off gambling debts
Does Online Gambling Affect Getting A Mortgage
If your habits have got to the point that they need a loan to pay them off, a mortgage lender will smell this a mile off.
Keep on gambling if you have a problem
Can Online Gambling Affect Getting A Mortgage Rates
Sometimes, it might take others to convince you that a once leisurely pursuit is now too much time spent gambling. Consider a limit on your account if you identify with any of the statements listed above.
Can Online Gambling Affect Getting A Mortgage Broker
A mortgage lender is far more likely to judge your credit score than a few harmless bets. Pay your debts and be transparent with your spending, and the rest should be easy!