topic Re: Next move in Mortgage Loans

Next move

Anonymous — Tue, 26 Mar 2013 20:37:52 GMT

Hi all, I've been lurking around for some time now. Now I have questions on what I should do next. I plan to apply for a mortgage in Sep-Oct, but I'm not sure what to do with my other debts.

CC1 Bal - 625 Lim - 4150 (not concerned about this one)
CC2 Bal - 2850 Lim - 7500
Car loan - 1800

Income is 50k a year I have student loan payments of 350 a month. Should I pay off my car(I don't owe a payment until Feb2014) or pay off my CCs? Or should I just save as much as possible until Sep. I will have around 10k saved by then but could have more if I stop paying so much towards my debts. Im looking to buy a house for around 125-150K.

Re: Next move

Anonymous — Wed, 27 Mar 2013 06:16:49 GMT

Paying down your CC's will most likely also help improve your scores. But you havent mentioned your scores so you may not need them improved.

You will have to bring your DTI down, but how you choose to bring it down is up to you. I would choose paying CC debt, but others may feel different.

Re: Next move

Anonymous — Wed, 27 Mar 2013 06:30:35 GMT

Pay off the credit card

Here is why:

1. Credit cards aren't amortized debt, so if you don't pay them down, they last forever and will never pay off.

2. The car is collateralized debt, so it is better to your credit score. It is an installment loan, it isn't open ended. It has a really low balance and a low APR.

3. Most debt reduction plans will tell you to pay off the highest APR debt first. This is so true and is true in this case because that debt is the worst debt of all, credit card debt.

Good luck!