What to debt to pay down?

[Anonymous]

I have 5 CCs. Four reporting at 0%, one at 80%. Next week, I'll pay the high utility down to 9%.

I also have one auto loan at 22% of loan, monthly payment of $415 with zero interest attached.

I'd like to buy a house in the next 4 months. My mortage scores are around 660.

My question is, after paying CC down, should I devote next round of funds to paying auto loan to 9% or to house purchase (more than 10% dp, closing costs, etc)?

Am I likely to see major score increase from lower auto loan but same monthly payment?

[Anonymous]

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@Anonymous wrote:
I have 5 CCs. Four reporting at 0%, one at 80%. Next week, I'll pay the high utility down to 9%.

I also have one auto loan at 22% of loan, monthly payment of $415 with zero interest attached.

I'd like to buy a house in the next 4 months. My mortage scores are around 660.

My question is, after paying CC down, should I devote next round of funds to paying auto loan to 9% or to house purchase (more than 10% dp, closing costs, etc)?

Am I likely to see major score increase from lower auto loan but same monthly payment?

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If you have a set date you are looking to buy, I vote savings. You have 0% interest on that auto loan so it's not costing you less to pay it off early. If not, no reason not to pay down a debt before putting money in savings, other than maybe making money off of the savings account with dividends.

And keep in mind when you pay off your auto loan, your score will take a bit of a dip from losing that credit mix bump.

[Anonymous]

Thank you! The idea of paying faster on a 0% interest is painful but I was wondering if doing so will increase chances for lower mortage rates. Definitely won't PIF since it's my only installment loan, but thinking about paying down to optimization %, getting a credit score jump (hopefully) and coasting with no payment for awhile. I'm already paid ahead until Sept.

[Anonymous]

I guess I'm just looking to see if there's anything left I can do to improve my chances of a low mortage in the next 4 months.

[Anonymous]

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@Anonymous wrote:
I have 5 CCs. Four reporting at 0%, one at 80%. Next week, I'll pay the high utility down to 9%.

I also have one auto loan at 22% of loan, monthly payment of $415 with zero interest attached.

I'd like to buy a house in the next 4 months. My mortage scores are around 660.

My question is, after paying CC down, should I devote next round of funds to paying auto loan to 9% or to house purchase (more than 10% dp, closing costs, etc)?

Am I likely to see major score increase from lower auto loan but same monthly payment?

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I do not see any reason to pay the auto loan to 9%.  No matter what, as long as there is a balance on the car, they will be counting the $415 payment in your DTI. 

Pay down the CC and save the rest for your DP, and closing costs.  Also, start saving for a home emergency fund.  Once you move into a new home, you will need to have reserves for those "what if" moments, such as leaky roof, flooding, plumber, pest control, etc.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:
I have 5 CCs. Four reporting at 0%, one at 80%. Next week, I'll pay the high utility down to 9%.

I also have one auto loan at 22% of loan, monthly payment of $415 with zero interest attached.

I'd like to buy a house in the next 4 months. My mortage scores are around 660.

My question is, after paying CC down, should I devote next round of funds to paying auto loan to 9% or to house purchase (more than 10% dp, closing costs, etc)?

Am I likely to see major score increase from lower auto loan but same monthly payment?

---

If you have a set date you are looking to buy, I vote savings. You have 0% interest on that auto loan so it's not costing you less to pay it off early. If not, no reason not to pay down a debt before putting money in savings, other than maybe making money off of the savings account with dividends.

And keep in mind when you pay off your auto loan, your score will take a bit of a dip from losing that credit mix bump.

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THIS! 

[DallasLoanGuy]

paying revolving will help scores.

paying the auto down wont. and you will still have a payment.  you would have to pay it off to have any benefit... and that would only be debt ratios. not score.

i like the plan of paying down revolving and saving the rest. you can always do more after the loan officer pulls credit and reviews file

[Anonymous]

@Muvani

What if the remaining balance on the car loan is less than 'minimum payment' ?  Are the Lender's DTI calculators smart enough to figure this out?

I'm trying to maximize my Mortgage score by keeping an active installment loan in my file yet keep the balance very low per Revelate's and Thomas_Thumb's posts..

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/How-to-increase-mortgage-score/td-p/45882...
http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/The-many-flavors-of-FICO-Editions-version...

My only concern with this is the possibility that the Lender's DTI calculator will only see the Minimum Payment field on the account and thus unfairly inflate my back-end DTI.  Anyone know the answer to this?

[Anonymous]

I wouldn't risk it.

If you don't close on the house immediately after you bring the balance down to under the minimum, you're out of luck because you will run into another billing cycle and have to pay the car off. That last payment will cause your score to take a hit.

Don't do it!

[DallasLoanGuy]

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@Anonymous wrote:

@Anonymous

What if the remaining balance on the car loan is less than 'minimum payment' ?  Are the Lender's DTI calculators smart enough to figure this out?

I'm trying to maximize my Mortgage score by keeping an active installment loan in my file yet keep the balance very low per Revelate's and Thomas_Thumb's posts..

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/How-to-increase-mortgage-score/td-p/4588202/page/2
http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/The-many-flavors-of-FICO-Editions-versions-and-variations/td-p/1197617/page/12

My only concern with this is the possibility that the Lender's DTI calculator will only see the Minimum Payment field on the account and thus unfairly inflate my back-end DTI.  Anyone know the answer to this?

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the loan officer can remove the last pmt from dti by reducing cash on hand by that amount.