topic Re: use money for down payment or pay off debt?? in Mortgage Loans

use money for down payment or pay off debt??

dianna98 — Sat, 06 Oct 2012 18:48:57 GMT

Hi everyone,
I am in the process of becoming mortgage eligible and will have my report pulled on November 19. My current FICO score is 643. I have one open collection account with a balance of $2500. I have spoke with the bank and was told that this does not need to be paid off since I have been in a recurring payment plan with them for over a year now, I make biweekly payments of $64. I am currently able to make extra money from overtime at work. So my question is should I try to pay it off quicker or save the extra money for down payment on a home? The reason I was thinking pay off the debt is a sales counselor told me that every $100 per month I can free up allows my to purchase about $18k more in home. What do you all think?

Re: use money for down payment or pay off debt??

Elcid89 — Sat, 06 Oct 2012 19:35:23 GMT

You need to be planning for closing costs as well as your downpayment, and to have 2 to 6 months of reserves post-closing, IMO. If the lender isn't worried about the trade-line, then your focus should be on the mortgage.

Re: use money for down payment or pay off debt??

TTR79 — Sat, 06 Oct 2012 20:15:59 GMT

^^^^I agree with Elcid89