Preparing to Buy a House - advice please

[boogiesaveslives]

I just want to say thanks to the community, I've come a long way since joining a few years ago. You guys rock!

I'm getting pretty close to applying for a mortgage loan.  I'd like to see what you guys think about my plan to decrease my DTI as well as shooting for the biggest score bump.

Here's my profile:

Current DTI           46% (based on 375k loan)

Student Loans       60k - mo. payment $365 but currently in deferment

Chevron                 0

JCPenney              0 - just paid off balance of $581 and took a 19 point drop!!!

Amazon                  0

Victoria's Secret     819   (2230 limit, 37% utilization)

Care Credit             2791 (6000 limit, 47% utilization)

Barclay Rewards    2356 (2500 limit, 94% utilization)

Walmart                  0

Barclay Apple         4727 (6000 limit, 79% utilization)

Logix CC                198 (1500 limit, 13% utilization)

Home Design         0

Collections

Franklin (OC AT&T) $81 - paid.  GW letter sent

Midland  (OC Tmobile) $1200 - scheduled to drop off this Oct

Midland  (OC HSBC)    $1100 - scheduled to drop off this Oct

There's a couple games I'm playing right now.

1) Student loans - currently deferred, racing the FHA countdown.  I'd like to get an approval before they change the rules in Sept.

2) Collections - I'm pretty much going to leave the Midland accts alone.  They can go fly a kite.

3) Credit Cards - I'm not sure what order I should pay these down.  I think the Barclay Apple and Rewards cards are hurting my scores the most, so I'm leaning towards paying those down next.  Care Credit has a 26% APR, and frankly, I just hate it.  LOL.  I'm using my Logix for day to day expenses, but plan to pay it down to about 7-9% utilization just before the billing cycle closes.  I've got about $5500 trickling in over the next month to put towards them, what order should I do it?

Side note, it's nice to see all of the cards I used to rebuild my credit all have zero balances.  

Thanks in advance!

[StartingOver10]

Does the 46% DTI you show include the future mortgage payment for the new $375k loan?  I assume so.

If it doesn't then my answer would be different.

You are right, the Rewards card and the Barclays Apple utilizations are hurting your score. Best to bring each of those cards under 30% of each of their credit lines. If you do that it will eat up most of your cash that you have set aside for cc payments.  But it should help your score. Have you tried for a SP CLI's at all? That might help too.

[Anonymous]

Your best bet would to be get that DTI to under 40% to be safe and really try to take a chunk out of that credit card debt. I recently paid down my utilization from 75% to 35% and my scores went up about 30 points on each report. If you have the funds available, pay off all credit cards except one and keep that balance at a utilization below 10% for the highest increase in your score. As far as the Franklin collection, if it is old enough, it probably isn't affecting your score much anymore but since it is paid most lenders will not consider it a huge problem unless it is very recent. Best of luck!

[boogiesaveslives]

Yes, the 46% includes the payment. 375k is on the high end, but better to overestimate.

I've been SP the other cards, but thought I couldn't with Barclay but after reading some boards I got a few tricks. Gonna make some chunky payments before I do though.

[boogiesaveslives]

Thanks kokenwa, that gives me hope! I'd love to see 30 pt increases. I've already made a big dent in the CC debt and will be making a few more big ones. My overall utilization is 42% now, a couple more months and I'll be golden.

Unfortunately the stupid Franklin collection hit my report last week. I think ATT screwed up and I paid it directly to ATT anyway. Tried to talk to Franklin yesterday to have it removed and they won't. Still sent the letter and I'll try ATT. So ridiculous.

[Anonymous]

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@boogiesaveslives wrote:
Thanks kokenwa, that gives me hope! I'd love to see 30 pt increases. I've already made a big dent in the CC debt and will be making a few more big ones. My overall utilization is 42% now, a couple more months and I'll be golden.

Unfortunately the stupid Franklin collection hit my report last week. I think ATT screwed up and I paid it directly to ATT anyway. Tried to talk to Franklin yesterday to have it removed and they won't. Still sent the letter and I'll try ATT. So ridiculous.

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Did you include your deferred student loans in the 46% DTI? If not, waiting and paying down your CC debt may push you past the 9/14 deadline (FHA rule change regarding student loan debt), causing your student loans to now be counted in your DTI. Just something to think about!

[boogiesaveslives]

Yeah, the 46% includes the student loans just in case I don't make the deadline

[Anonymous]

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@boogiesaveslives wrote:
Yeah, the 46% includes the student loans just in case I don't make the deadline

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Good call!

[boogiesaveslives]

Thanks! In terms of the 9/14 deadline, do I need to apply by 9/14 or before? What's the latest I should apply to get an approval in time?

[Anonymous]

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@boogiesaveslives wrote:
Thanks! In terms of the 9/14 deadline, do I need to apply by 9/14 or before? What's the latest I should apply to get an approval in time?

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You need an FHA case number before that date. To get an FHA case number you need to be in contract. So it really depends on how long it takes to find a property and get an offer accepted, but if I were you I'd get pre-approved ASAP.