Trying to provide all relevant information but have edited for shortness.
Situation: Renting house for 2.5 years and agreement in principle with landlord to buy it once we have financing. Price will be 155k-165k. No agent involved or wanted. First time homebuyers. Eligible for 2.5% down payment assistance grant if we close by ~April 2015. Currently paying $1270/mo rent and no problems paying that.
Yes, we are choosing to try to get a mortgage because of stability and to take advantage of the down payment assistance grant, yes we know it may not be any cheaper.
DH = husband, DW = wife.
Credit: MYFICO: DH: 637EQ, 634TU, 677EX (does not have the one 30daylate); DW: 659EQ, 670TU,669EX. DH has one 30-day late in 08/13, no other negatives for either.
Income & Source of income: Gross income from all sources ~84k. DH works for 2.5 years salaried full time same employer. W-2 income, plus we have child support and a social security check coming in. ~18k of income is from a loan repayment assistance program reported on a 1099 with no restrictions on usage - we get this money in two checks each year, and plan to use one of those checks as part of our down payment and closing costs - will this cause any problems or is the information on the program sufficient to source it?
Monthly debt payments: We have approximately 26,000 in debt on 20 credit cards between us, which includes 6 store cards. Limits ~$30,000. One of those cards has ~904 balance and DH closed to keep a very low interest rate - how is the prior 2,000 limit treated for utilization? I included the balance but NOT the credit limit in the above numbers.
We have ~300,000 combined student loans, paying $525 a month total. Paying $850 a month on the cards now. No other debt, so total debt payments ~1375.
Assets/reserves: We have ~$6,000 cash left NOW to pay down cards. Should we pay the highest utilization or highest payment? Either way we will focus on DH's cards to improve his scores. We will also try to get credit limits increased if we can do so without hard inquiries, to get a better utilization and improve scores.
Have a ~$9,000 check incoming (guaranteed) in early 2015 from the LRAP, will use this with the 2.5% grant from the state for down payment, closing costs, etc.We also have $1,250 in security deposit with our landord, the fate of which is undecided/unclear.
Location: Franklin County, Ohio (Columbus area).
Property: Single family home, 10 years old in good condition, no concerns but we do plan to get our own independent inspection.
Value: We expect a purchase price in the 155-165,000 range.
Occupancy: Primary residence.
Transaction type: First time homebuyer purchase.
Edit 2: I edited the original post to include all the additional data and also to make it shorter in hopes of getting some more thoughts. Any thoughts are welcome, thanks!
The biggest bang for your buck is going to get the utilization rate down on your credit cards. Don't close any of the accounts, just pay them down. The sweet spot score wise is utilizing 9% or less on your combined total credit limits, preferably on one or two cards.
If you have any of the credit cards that are 90% of higher in utilization, I'd pay those down first because you get dinged for being maxed out as well as having high utilization. Likewise, if you have a bunch of cards with smallish balances I'd pay those off beginning with the smallest balance and working upward.
Go over your monthly expenditures and see where you can cut back a litlte, there's always some savings to be found (less trips to the salon, better cell phone plan, less cable, using coupons, eating out less, skipping the morning latte, etc.)
Thanks for these thoughts. We do have a few that are over 90% and are bringing those down (example: paying 2400 (out of 2500) down to 1950).
We paid off a few smallish balances already under the theory the eliminated payments help our DTI. After everything is brought down to 90% and 1k+ balances are all that's left, we're probably going to go at highest-interest-rate first since at that point it's all about aggregate utilization as best as we can figure.
Our monthlies are reduced pretty far - DW cuts everyone else's hair and gets her own cut every 6 months at a value shop for $15, we already switched to T-Mobile and saved some good cash there, our cable is basic cable only (can't eliminate it entirely because there is an element of DH's job that requires it), and we also do not drink coffee except for DW sneaking a pumpkin spice latte or other seasonal drink about twice a month during colder months. DH used to drink diet soda quite a bit but has given that up as part of our push to save money.
We do need to up our coupon game again - we used to be very good at it and have fallen out of practice due to time issues. Eating out is probably our biggest single issue, as we often have little time due to DH's schedule, so we rely on fast/fast casual food way more than we should, I would estimate 3 times a week. Thank you for those reminders, particularly on couponing!