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Need advice with debt for future mortgage

Super Contributor

Re: Need advice with debt for future mortgage

@annpalmer wrote:

Any thoughts on using my HYS? As stated above, I like the peace of mind of having it, but I know mathematically it's better to apply it towards debt. I don't have a plan for what that would look like: use it all? pay $500? pay $2500? etc. I have $2000 in the (physical) bank... well, credit union but either way. I'm very secure in my full-time job (it's hairdressing that fluctuates) but not sure how much to keep.


$2500 is my goal for in the bank, as it will be approx. 1 month and I don't have many expenses I can use CCs for if I were to need to (e.g., rent, and current min payments I can't use cards for if I lose my job, but could use cards for internet/cell, gas, electric, and car insurance, along with gas and groceries).


the $6600 online HYS is my hoard lol

Well, if you feel you need to keep the savings for your peace of mind, then by all means keep it.


But I  interpreted your initial question as basically how to get your scores in position for a mortgage.


The way to for you to get into position for a mortgage is to pay down your revolving debt.


But buying a house requires a down payment as well as getting a mortgage.


And please remember that the mere fact that you can get a mortgage doesn't mean you can afford the burden of home ownership, or even that you can afford the mortgage.  Nowadays, with securitization of mortgages, lenders are often willing to give mortgages where they know the borrower has a high likelihood of defaulting down the road.

Total revolving limits 654000 (575000 reporting) FICO 8 EQ 714 TU 731 EX 713

Message 11 of 13
Regular Contributor

Re: Need advice with debt for future mortgage

@ annpalmer 


I can understand that you'd like to keep that 2500.00 in the bank for emergencies, thats fine, but you

may have no choice but to use your HYS to stop the bleeding. 


Chase 17.24% $14,481.87/$15,500.00 93.43%

BofA 13.49% $9,861.99/$10,600.00 93.04% 0-2-2020

Cap1 17.15% $1,716.74/$2,500.00 68.67%

WF 26.74% $1,854.72/$3,000.00 61.82% (opened for BT)


The first two, Chase and BOA are concerning, they are maxed out and I am worried about

them decreasing your credit line.  You would probably benefit if you used 4000.00 of the HYS and

put 1000.00 on each of these cards to start.  Doing so would bring you to 87 utilization on the Chase and

84 percent utilization on the BofA.   A little breathing room.  


You would also bring down your utilization down on Cap 1 to 29 percent utilization by paying 1000.00

on that card and Wells Fargo to 29.00 utilization.  While it would be ideal to bring that down to under 28.9,

to cross another utilization threshold, it's a lot better than it was.  


Make the minimum payments on the other 3 cards and tackle the smallest balance, which would be your

Cap 1.  Throw as much as you can on it, while keeping the minimums on the other cards till it's paid off.

Then apply the money you were paying on Cap 1 to your next smallest balance, Wells Fargo. 

 Wash, rinse, repeat until you finally finish paying them all off.  It's going to take some time to

get there but this is a marathon, not a sprint. I'm sure someone else will chime in with even better advice

than I suggested. 


I only say this because I was in the same place you find yourself in now.  In September of 2017, I was

28000.00  in debt and I decided to take the bull by the horns and be done with it.  I took a part time job, I

did a combination of balance transfers and a personal loan myself but you've already done a personal loan

with Lending Club so I would leave the balance transfers alone and just starting to pay this debt down. 

it seems like it goes slow at first, but before you know it, you'll be rid of the smaller credit cards and working

on the higher ones.  Then I would make a good budget, and start thinking about preparing for a mortgage. 


I finally finished my marathon the end of last month, my monthly debt was 166.00, but it CAN be done.


You'll get a lot of great advice in these forums, so just learn from what they suggest to you.  I am wishing

you the best of luck. Smiley Happy






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Message 12 of 13
Senior Contributor

Re: Need advice with debt for future mortgage

While others are right that you'll need Money for a down payment, the interest on those balances are killing any interest gain you're seeing on the HYSA. Based on your monthly finances it's clear you don't have a lot of extra funds to pay them down fast, so i would definitely use your $1,600 PFD and any bonus and tax Refunds to help bring those down as quickly as you can. Perhaps stop paying auto insurance 6 months in advance and just absorb it into your monthly budget.


As others have said Chase can be less tolerant of high balances than others, so I'd seriously pay down them as much as possible first. $3K frome HYSA?

Next would be to hit BofA with maybe $2K from Savings?

Keep paying more than the minimums on each CC as well. Then when you get your $1,600 PFD pay towards Chase again. In December use your $1K bonus towards BofA. I would continue this every year until those two are under the 38% mark, and any extra funds available use towards the smaller balance CC's. Once you stop paying so much in interrest annualy on those high balances, you should be able to start putting Money back into your HYSA and Savings. Based on your CC lineup, I don't see the need to app for anything in the next few years. So you should be sitting good for that Mortgage in about 4 years, once all those balances have been paid down to 18% on each CC. 


Lower is better, but based on your available funds and debt load. It's likely not doable by the time you want to buy a house.


Message 13 of 13
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