topic Re: Pay off CC or save for a house in Credit Cards

Pay off CC or save for a house

Anonymous — Wed, 25 Sep 2013 11:41:40 GMT

So, I have a Citicard with 4,000 out of 5,000 and chase 4,000 out if 5,000. Score is 677 trying to get to 700 or higher to qualify for a good mortgage. I would like to start process in Jan to look for a house. Should I take the money and save for house or pay down credit cards. Really need to move

Re: Pay off CC or save for a house

tcbofade — Wed, 25 Sep 2013 11:45:03 GMT

Our mortgage banker said to reduce credit card debt...if you've got a banker that you want to work with, call them and ask which matters more.

In our case, the banker wanted NO credit cards over 50% util to help with FICO score, the higher FICO score allows her more room to wiggle with DTI.

YMMV of course.

Re: Pay off CC or save for a house

azguy13 — Wed, 25 Sep 2013 11:45:41 GMT

How long would it take you to pay down both cards? I can tell you that Uti is a large factor in your score. Not that you said you are, but I would not app for any new cards to lower your uti only because you will begin the process of mortgage pre-qual in Jan.

Re: Pay off CC or save for a house

azguy13 — Wed, 25 Sep 2013 11:50:32 GMT

****Double Post******

Re: Pay off CC or save for a house

Anonymous — Wed, 25 Sep 2013 12:29:57 GMT

I can probably get them to under 50% by the end of the year, but I will not be able to save more money towards the house.

Re: Pay off CC or save for a house

Anonymous — Wed, 25 Sep 2013 13:09:17 GMT

The advice of talking to a broker is a good idea, just don't let them HP your account. If it really is an either-or, the question is how much have you saved (and how much could you save if you don't pay down the cc) towards the down-payment. Where a broker might be able to help is to give you some idea of the score brackets. So maybe getting to 700 won't help a lot compared to where you are (in which case save for the down-payment) or doing that will push you into a much better rate, saving tens of thousands over the life of the mortgage, in which case pay the cards down instead. I also don't know how much improvement you will get from going from 80% on two cards to 50% on two cards.

Re: Pay off CC or save for a house

youngandcreditwrthy — Wed, 25 Sep 2013 13:43:09 GMT

Also please remember if you do not put 20% down, you will pay PMI for an FHA for the LIFE of the loan. It cannot be removed as in could in tbe past. This could add an extra 1% to the rate of your loan...
Compound that over 15-30 years and see which is more expensive..

Re: Pay off CC or save for a house

takeshi74 — Wed, 25 Sep 2013 15:51:10 GMT

@Anonymous wrote:
So, I have a Citicard with 4,000 out of 5,000 and chase 4,000 out if 5,000. Score is 677 trying to get to 700 or higher to qualify for a good mortgage. I would like to start process in Jan to look for a house. Should I take the money and save for house or pay down credit cards. Really need to move

Do the math. 8,000/10,000 = 80% which is way too high to apply for anything. +1 for talking to a broker first though.

Re: Pay off CC or save for a house

bahbahd — Wed, 25 Sep 2013 16:34:31 GMT

@youngandcreditwrthy wrote:
Also please remember if you do not put 20% down, you will pay PMI for an FHA for the LIFE of the loan. It cannot be removed as in could in tbe past. This could add an extra 1% to the rate of your loan...
Compound that over 15-30 years and see which is more expensive..

+1 for >= 20% down.

Re: Pay off CC or save for a house

JMills — Wed, 25 Sep 2013 17:48:32 GMT

Pay your debt first, then save, that's what I'm doing!

Re: Pay off CC or save for a house

SuperKirby — Wed, 25 Sep 2013 18:25:47 GMT

@youngandcreditwrthy wrote:
Also please remember if you do not put 20% down, you will pay PMI for an FHA for the LIFE of the loan. It cannot be removed as in could in tbe past. This could add an extra 1% to the rate of your loan...
Compound that over 15-30 years and see which is more expensive..

Is this true for all mortgages? I'm a newb in this matter.

Re: Pay off CC or save for a house

Emdee_MD — Thu, 26 Sep 2013 01:36:39 GMT

When did the removal of PMI change? Ive always heard 5 years minimum. Is this something new?