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.
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.
I can probably get them to under 50% by the end of the year, but I will not be able to save more money towards the house.
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.
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.
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.