Debt can be an important tool if managed well. It helps people obtain what they want, manage outflows of money, or it could be a drain on resources. The best use of debt is for large purchases that normally create equity, such as a mortgage when buying a home. The use of debt such as credit cards needs to be actively managed so it does not get out of control.
Many loan officers use the following rules of thumb in assessing whether a home mortgage will be offered to a borrower.
Debt Management Rules of Thumb: