Hi everyone, I am in the process of becoming mortgage eligible and will have my report pulled on November 19. My current FICO score is 643. I have one open collection account with a balance of $2500. I have spoke with the bank and was told that this does not need to be paid off since I have been in a recurring payment plan with them for over a year now, I make biweekly payments of $64. I am currently able to make extra money from overtime at work. So my question is should I try to pay it off quicker or save the extra money for down payment on a home? The reason I was thinking pay off the debt is a sales counselor told me that every $100 per month I can free up allows my to purchase about $18k more in home. What do you all think?
You need to be planning for closing costs as well as your downpayment, and to have 2 to 6 months of reserves post-closing, IMO. If the lender isn't worried about the trade-line, then your focus should be on the mortgage.
FICO 04 scores: 809 (EQ) 812 (EX) 818 (TU)
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