is it more important to have a big down payment or to have no debt? my husband and i have only about 6500 in debt on a credit card of only 8.9% apr but we're debating on whether or not to pay off the credit card first and then save for a down payment or double our credit car payment and put the rest into savings for a down payment. which would be better?
2007-09-10 05:27:04 · 6 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
dont listen to any of those answers except to put down a large down payment.....I have been a mortgage consultant for the past 5 years.....it is ALWAYS better to put the large down payment down because it will change your Loan-to-Value so that a) you end up with a better interest rate. b) hopefully you can avoid mortgage insurance-->ask about a combo loan..... don't listen to this credit card guy telling you it will increase your score to pay it off because that's bull.....you guys owe 6500 on a cc right? if your limit on this card is 13000 or more then its been raising your credit score since youve had it......in order for a cc to be beneficial you need to keep the balance around 50% or less of the limit for your scores to increase....if its above 50% then your score will SLOWLY decrease....and since you are only paying 8.9%...that's a pretty good card...and keep in mind if you put this large down payment down and then work on the credit card and still can't pay it down then you can always re-finace because you have that money in equity in your home....and realistically you will probably need to buy some new things for the new home anyways...but take my advice and use this money for a down payment...in todays market you cannot even get qualified for a new purchase loan unless you have 3-10k to put down...so if you pay that card you will probably be denied for the loan....I have tried to get a few people qualified for a no money down purchase loan....and if the do go......they are very dirty loans and you will not be happy.......I hope this helps you.
2007-09-10 07:34:25 · answer #1 · answered by DbagD 2 · 1⤊ 0⤋
Mortgage lenders do not look at 'debt'.
They look at your monthly payments compared to your income. Also known as 'debt-to-income-ratio'.
Some loans have a 2.25% down payment requirement...such as FHA. MyCommunity mortgages have a 0 down payment with a 620 credit score.
Also, this depends on how much of a house you plan on purchasing...and what percentage you're planning to put down.
2007-09-10 06:09:50 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Pay off the credit card first. It will increase your score for one thing and that might give you a better interest rate on the house.
Then save for the downpayment.
2007-09-10 05:46:27 · answer #3 · answered by bdancer222 7 · 0⤊ 0⤋
And, get a 15 year mortgage. You'll save an amazing amount in interest. Go find out about it.
2007-09-10 05:55:08 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Big down payment.
2007-09-10 05:35:06 · answer #5 · answered by Cristi H 4 · 0⤊ 0⤋
It's always better to have as less debt as possible. It shows that you can afford to pay your bills with less effort on your part.
2007-09-10 05:36:00 · answer #6 · answered by Jai 7 · 0⤊ 0⤋