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Mortgage/$$$ advice

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Anonymous
Not applicable

Mortgage/$$$ advice

I'm 25 years old, single. and starting make around 90k a year now. I currently have approx 10k in the bank and I'm trying to decide if I should pay off my student loan(Balance of $4,900) and my 2 credit cards($650 balance, $12,000 limit, and the other one, $3,380 balance, $6,500 limit). If I don't pay off the balances in full and I just keep making the monthly payments, based on my calculations, I should have about 40-45k saved by this time next year, which is my goal to get into a 300k-320k home. My credit score is 746 right now, no judgements or negative accounts/issues.

 

  1. Credit - 746
  2. Income 90 k
  3. Location. Long Island NY
  4. Property.  Single Family.
  5. Value. 300-325k
  6. Occupancy.  Primary residence.
  7. Transaction Type.  Purchase

 

 

 

 

 

 

Will it help or hurt me if I keep these balances come mortgage time?

 

Another question, would it just be better if I waited longer to have enough cash for a 20% downpayment, rather than a FHA loan?

Message 1 of 6
5 REPLIES 5
jules0580
Regular Contributor

Re: Mortgage/$$$ advice

It will help you to have the balance, if you pay everything off then they will stop reporting to your credit report, thats not to say you couldnt pay a big chunk of the student loan off or even the credit card, pay off the balances and then use it every month for gas and small things so that it will report  a balance and then you can pay it down to have $10 left on each card each month .. that seems to be the magic number according to people. Your score is great, but you want to make sure you have active credit lines which paying off the accounts would stop that.  Your DTI will be fine for what you are looking at so you have no worries. You could pay off $3000 of the one to save yourself interest but you want to show a little balance at least each month or they dont have to report.

Message 2 of 6
Anonymous
Not applicable

Re: Mortgage/$$$ advice

With the credit cards I would definetly leave a small balance on there every month, I am aware of what happens when you stop using your credit cards altogether. Thank you

Message 3 of 6
jules0580
Regular Contributor

Re: Mortgage/$$$ advice

Also for the student loan they do like to see a different mix of trade lines so having that still open will help as well of course you can always pay that down quite a bit too first and hten just have a smaller balance but it does help your credit having a good mix

Message 4 of 6
webhopper
Moderator Emeritus

Re: Mortgage/$$$ advice

I would say pay off the cards but don't pay off the student loan... Just my Opinion.

FICO 9:
Filed Chapter 13 on 6/1/2017 after job loss. Discharged 6/1/2022.

Goal: Gardening!


Message 5 of 6
Anonymous
Not applicable

Re: Mortgage/$$$ advice

I'd pay it all off and rejoice in being debt-free, assuming there's a significant interest rate on any of it. $40-50k is still not the 20% down required to avoid PMI, so you would end up saving more money in, say, year two than if you kept the debt, and have a slightly lower DTI to boot.

 

If you're hardcore, maybe calculate what saves you more by year 30?

 

Kepping lines active is already something you're aware of, so no worries there.

 

EDIT: Also consider if that extra $10k would put you in position to do a 15-year instead of a 30-year, which would obviously be a money saver.

Message 6 of 6
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