Posts: 8
Registered: ‎09-13-2012

use money for down payment or pay off debt??

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?
Posts: 567
Registered: ‎10-04-2012

Re: use money for down payment or pay off debt??

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)

Amex Platinum NPSL - Citi HHonors Sig. $58k - BMW Ultimate $40k
Chase Sapphire Preferred $62k - Merrill Lynch + Signature $41k - USAA Rate Advantage $28k
NFCU Flagship Signature $50k - USAA Cash Rewards AMEX $28k
Citi Platinum Select / AAdvantage Signature $31k - Chase Amtrak Rewards World MC $41k

Established Member
Posts: 40
Registered: ‎09-13-2012

Re: use money for down payment or pay off debt??

^^^^I agree with Elcid89
 photo chase_zps33a8a30c.jpg photo usaa_zpsa1e01bfc.jpg
Disover IT
BB&T Platinum

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.

>> About myFICO
FICO Score - The Score that matters
Click to Verify - This site chose VeriSign SSL for secure e-commerce and confidential communications.
Fair Isaac Corporation is a BBB Accredited Financial Service in San Rafael, CA
FOLLOW US Social Media Facebook Twitter Pinterest Google+