topic Re: Hold onto reserves or pay off debt? in Mortgage Loans

Hold onto reserves or pay off debt?

Anonymous — Fri, 25 Sep 2015 23:03:56 GMT

I'm a few months away from being ready to apply. I currently have $41k in liquid savings in a money market. I have a total of $25k in debt. A personal loan, a timeshare condo loan (Yes, I know. Don't even yell at me about that one!), a 403b loan & one old Newegg account that's closed, but still has a balance. Still a hidden trade though. I'm good on cars. I have a 2009 Explorer & a 2015 Mirage, both paid for with titles in hand. If I pay these debts off, I'll still have $16k in savings & can also add their former payments to savings each month. ($1000ish). By the time I'm ready to apply, I should have added back about $4k plus a $5k tax refund. Thoughts?

Re: Hold onto reserves or pay off debt?

Anonymous — Fri, 25 Sep 2015 23:07:11 GMT

I would most likely be looking at FHA or USDA. Mortgage of about $160k. My personal income is about $35-40k. My children's survivors benefits adds another $36k, but $12k is one child whose benefit will end in less than 3 years. It won't be counted.

Re: Hold onto reserves or pay off debt?

Anonymous — Fri, 25 Sep 2015 23:19:06 GMT

If you have the cash, always pay off debt. The interest you would pay by not taking care of it now would just be a waste of money in my opinion. Not that my opinion is gold or my thoughts better than anyone else's, but that 1k savings a month would be like double savings as its more cash in your pocket and the payoff would lower your DTI. Depending on your credit score and the final price of the home, you may not have to have much reserves to close the loan. But a bad DTI is a deal killer and lenders may see a pile of debt, 1 income, and a mortgage as too much for 1 person to handle.

Re: Hold onto reserves or pay off debt?

StartingOver10 — Sat, 26 Sep 2015 01:04:30 GMT

@Anonymous wrote:
I'm a few months away from being ready to apply. I currently have $41k in liquid savings in a money market. I have a total of $25k in debt. A personal loan, a timeshare condo loan (Yes, I know. Don't even yell at me about that one!), a 403b loan & one old Newegg account that's closed, but still has a balance. Still a hidden trade though. I'm good on cars. I have a 2009 Explorer & a 2015 Mirage, both paid for with titles in hand. If I pay these debts off, I'll still have $16k in savings & can also add their former payments to savings each month. ($1000ish). By the time I'm ready to apply, I should have added back about $4k plus a $5k tax refund. Thoughts?

You don't say what your income is or your mortgage scores, but I also am a fan of going into your mortgage loan with manageable debt. Without knowing the details we are just speculating, but paying off the debt on the personal loan, the timeshare loan , and the Newegg account would be a good thing. As to the 403b loan, depends on how much it is and what rate you are paying.

OTOH, having cash in the bank and letting the loan officer tell you which one's to pay off may be your best bet. Don't know for sure, we really don't have enough info.

Re: Hold onto reserves or pay off debt?

Anonymous — Sat, 26 Sep 2015 01:17:25 GMT

I'd lean towards paying off the debt and getting that clear.

Re: Hold onto reserves or pay off debt?

Anonymous — Sat, 26 Sep 2015 01:39:26 GMT

Well, I actually did include my income in the second post. Last mortgage scores, a couple months old now, were 626, 669, 640.

Re: Hold onto reserves or pay off debt?

Anonymous — Sun, 04 Oct 2015 23:07:57 GMT

I pulled a newer set of scores. Latest mortgage version scores are 639, 647 & 680. And I'm still pretty sure I want to wait until at least January before applying.

Re: Hold onto reserves or pay off debt?

Anonymous — Sun, 04 Oct 2015 23:10:12 GMT

Oh & I've decided to pay off the timeshare mortgage, Newegg & personal loan. The 403b loan will be paid off next year anyway.

Re: Hold onto reserves or pay off debt?

Anonymous — Sun, 04 Oct 2015 23:44:06 GMT

Sounds like your plan is working. By the time January comes your middle score should be up a fair amount.

Re: Hold onto reserves or pay off debt?

Anonymous — Mon, 05 Oct 2015 01:39:24 GMT

I'm hoping that my low score well be above 640 by then. I reckon it should be.

Re: Hold onto reserves or pay off debt?

Anonymous — Tue, 06 Oct 2015 19:07:49 GMT

My current plan is to have everything paid off before the end of October. Add to savings in November & December. Pull my next 3B 01/06, which is when it's available under my subscription. (I will cancel sub after that.) If my scores look good enough to go, I guess I'll find myself a mortgage lender to apply with for a preapproval. Then go shopping. Maybe. Hopefully in a house before the end of April.

Re: Hold onto reserves or pay off debt?

Anonymous — Fri, 30 Oct 2015 00:08:09 GMT

Just an update. This whole process makes me nervous. As nearly as I can tell, social security survivor's benefits for two of my children will count towards mortgage qualifying because the benefits will continue for at least three years. My oldest cooks benefits will cease in 35 months from right now, so that will obviously be less in January when I apply. When my kids age off, I'll go back to full time