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Should I use personal loan pay mortgage closing costs?

Should I use a personal loan to pay for mortgage closing costs?

Michael Jensen, Mortgage and Finance Guru
, Mortgage and Finance Guru

It is possible that you could obtain a personal loan to pay for mortgage closing costs; however, we do not recommend this approach. Applying for a new personal loan can impact your credit score and debt-to-income ratio which can undermine your ability to qualify for a mortgage. Instead of using a personal loan, we recommend that you consider using a closing cost assistance program. These programs help home buyers pay for all or part of their closing costs. We provide a comprehensive overview of Closing Cost Assistance Programs on FREEandCLEAR. Closing Cost Assistance Programs are typically provided by HUD-approved local housing commissions in conjunction with local lenders. I have provided a link to the HUD web site where you can select your state and find your housing commission to learn more about the programs available to you. Your housing commission may offer additional home buyer assistance programs and you should also ask the lenders you contact for your mortgage about any closing cost assistance programs they offer or recommend.

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About the author

Michael Jensen, Mortgage and Finance Guru

Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael

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