09-25-2013 04:41 AM
09-25-2013 04:45 AM
Our mortgage banker said to reduce credit card debt...if you've got a banker that you want to work with, call them and ask which matters more.
In our case, the banker wanted NO credit cards over 50% util to help with FICO score, the higher FICO score allows her more room to wiggle with DTI.
YMMV of course.
09-25-2013 04:45 AM
How long would it take you to pay down both cards? I can tell you that Uti is a large factor in your score. Not that you said you are, but I would not app for any new cards to lower your uti only because you will begin the process of mortgage pre-qual in Jan.
09-25-2013 04:49 AM - edited 09-25-2013 04:50 AM
09-25-2013 06:09 AM
The advice of talking to a broker is a good idea, just don't let them HP your account. If it really is an either-or, the question is how much have you saved (and how much could you save if you don't pay down the cc) towards the down-payment. Where a broker might be able to help is to give you some idea of the score brackets. So maybe getting to 700 won't help a lot compared to where you are (in which case save for the down-payment) or doing that will push you into a much better rate, saving tens of thousands over the life of the mortgage, in which case pay the cards down instead. I also don't know how much improvement you will get from going from 80% on two cards to 50% on two cards.
09-25-2013 06:43 AM
09-25-2013 08:49 AM - edited 09-25-2013 08:51 AM
So, I have a Citicard with 4,000 out of 5,000 and chase 4,000 out if 5,000. Score is 677 trying to get to 700 or higher to qualify for a good mortgage. I would like to start process in Jan to look for a house. Should I take the money and save for house or pay down credit cards. Really need to move
Do the math. 8,000/10,000 = 80% which is way too high to apply for anything. +1 for talking to a broker first though.
09-25-2013 09:34 AM
Also please remember if you do not put 20% down, you will pay PMI for an FHA for the LIFE of the loan. It cannot be removed as in could in tbe past. This could add an extra 1% to the rate of your loan...
Compound that over 15-30 years and see which is more expensive..
+1 for >= 20% down.