Downpayment question

[Anonymous]

I would like to buy a house in summer 2008.  My wife and I both have pretty good FICO's right now (see below), but I just transferred $12,000 of credit card debt to her CC that has a $13,000 CL to save on some interest (it's 0% through March 2008).  So I assume that her scores will be going down somewhat due to the high util on that one card.  Overall, our util's are at around 25%.  I originally planned to pay down the CC debt steadily (about $1,000/month).  But now I'm worried about the down payment for the house.  I've been reading that these days it's going to be tougher and tougher to get a house without putting at least 5% down.  So I'm torn - continue to pay down the CC debt, or add to our savings for down payment even though FICO's (and eventually interest rate on mortgage) might suffer?  Any thoughts?

[ShanetheMortgageMan]

Unless you buy in a "declining market" and are buying a home $417k & under you should be fine to do 100% financing.  In addition to a possible down payment there are also closing costs, however these days sellers are very willing to pay buyers closing costs if that means they can sell their home.

[Anonymous]

ae76 wrote:

I just transferred $12,000 of credit card debt to her CC that has a $13,000 CL to save on some interest (it's 0% through March 2008)

...

Overall, our util's are at around 25%

...

I'm torn - continue to pay down the CC debt, or add to our savings for down payment even though FICO's (and eventually interest rate on mortgage) might suffer?  Any thoughts?

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If your FICOs are 720+, then you're gold. However, DW and I did $0 down (albeit way back in September) with a median FICO around 630.

My two cents, do that which will pay off the CC debt the fastest--in this case keeping the debt on a 0% APR CC. Push comes to shove, when you get closer, if the industry is looking very stingy and you're thinking you'll have to cough up a down payment, you could pull some cash outta your CCs. There would be fees for doing cash advances, but I honesty don't foresee that being necessary.

A completely legal sleight of hand game you could play is pulling the downpayment, up to $10K, outta your IRA. No fees, no charges, no penalties. If you aren't already maxing your IRA, you could "pay it back" during the year by contributing the amount you withdrawal, at least up to $4K.

Not sure if both spouses could withdrawal painfree from an IRA for a downpayment. If so, then you could pull $4K outta each, "pay back" $4K to each during the year, not pay any fees or penalties, and not lose anything on your retirement fund.