Contact Kate For Strategies To Buying A First Home
by First Time Home Buyer
(USA)
We're buying our first house and have mortgage questions for Ask Kate! We are preparing ourselves because our credit score is OK (not great), we have some credit card debt and we don't have much savings for the down payment. We are trying to pay down the credit card debt so that our credit score will be in a great shape when we apply for the loan. We are shooting for the 720 range but are concerned about our lack of funds for the down payment.
Do you think we should be saving the money we are using to pay off the credit card debt for the down payment and closing costs? What is your suggestion for the best strategy for the first-time home buyer: pay down the debt or save a 10% down payment?
In an ideal situation, we would love to be able to accomplish both, but I am not sure if it is worth waiting and keep renting for another 5 years. We are looking for 30-year fixed-rate loan, so we would like to bring our interest rate and other fees as low as possible.
What You Need To Know
About Mortgage Pre Approval
Dear First Time Home Buyer,
Mortgage pre approval is the starting point to owning your dream home! A mortgage pre approval will tell you if you need a down payment or to reduce debt. Sometimes it is a balancing act, a mixture of both. But without mortgage pre approval, you are left guessing.
Some mortgage lenders require more down payment but others want to see less debt. So, here is mortgage advice I used to give my first time home buyers. If you keep your cash, you are prepared to pay off debts, increase your down payment or a mixture of both, depending on your mortgage pre approval. Don't forget, if you use up your cash to pay off debts now, the cash is gone.
Just remember, when it comes to paying off debt vs. saving for a down payment, it is a bit of a balancing act. You need to coordinate the two. Both are important and you need a reliable mortgage pre approval to help you decide.
Best wishes and good luck,
Kate
P.S. You probably already know this but be careful when shopping for a lender that your credit does not get pulled multiple times. Here are some great tips to
fix a credit score.
P.P.S. Go to my
Best Mortgage Rate Blog, an entertaining source of mortgage information. Subscribe now to the RSS feed.
The information you obtain at this site is not, nor is it intended to be, a substitute for financial, real estate or legal advice. You should consult an attorney, accountant, lender or real estate agent, as applicable, for advice regarding your individual situation.
