without knowing more, and assuming your cr's are fairly clean, i would pay down the cc debt to 1-9%....probably get a pretty decent score boost and possibly qualify for a ndp mortgage at a better interest rate. i would check all three fico scores.
With your score you are on the line of prime and subprime! A good loan officer will look at you credit report and look at all the options. Most loan officers take the easy way out and the easy way can pay them more and cost you more!!
They need to try to take you Alt-A or get an uplift to go Prime. If I were you I would pay everything on time and put the 20K in the bank. Go prime they are going to ask for 3 months of you bank statements to show that the money has been in your account or to get around that tell them to do a Verification of Deposit.
To get the uplift to take you prime... Min of 2 years at the same job or field, No or Paid collections, no liens, and No BK. If you do have a BK you can get around it to go prime. The loan officer just needs to know how to get through and not around the guidelines.
I use to work in a special department where I would under cut and out smart other loan officers. I out smarted them by showing the borrower what was going on and how to read the doc's. In that department I would see HUDs from other companys all day and see all the bull$hit and just break it down for the borrowers. Now im just going blah...blah... blah...
My point is take good notes!!! Get the loan amount, rate, term, and payment before taxed and insurance. Ask about prepays and keep asking till you run out of things to ask!
Wow, and I thought it was just an simple solution. I appreciate the info, I'll definitely look into everything you mentioned. Is the 3 month check on bank accounts standard when applying for a mortgage?
Lets just say Im a prime borrower with a 650 Fico and I have 20K in the bank. Hmmmm A or B?
Well for Fanniemae you need 3 - 6 months of PITI or maybe my fico is 650 and I have a BK that 3 years old with no late of collections after and I want to go prime. Either way I need 3-6 months of PITI.
Maybe Im prime with a 650 and my DR is too high... then I could pay off the debt and lower my DR.
I thing for me the answer would be A because if I have the money in the bank I can show cash and if I need to lower my DR I can paid debt on the HUD at closing.
Every borrower is different and you need to speak with a loan officer. Just remember that you can give the same loan to 10 loan officers and get 10 different loans back. A good loan officer will do all the leg work to get you the best deal. The loan officers that come back with crap are the ones thinking about getting paid.
Do what's best for you and remember that both A and B could be right and maybe we didn't see a C or D option. EVERYONE IS DIFFERENT!!!!!!!!!!!!!!!!!!!!!!!!!!!
Message Edited by OneMortgageGuy on 06-27-200711:08 AM
myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.