credit card debt and mortgage

gripes · Joined: 02 Feb 2005 Posts: 2

Hello, I am new here. I have a quick question. It might be stupid but here it is anyways. I am a home owner right now and would like to buy a new house which is twice the value of mine right now.

I can afford the new mortgage if I didn't have huge credit card debt.

Right now If I sold my house I can pay off my credit card debt and have some money left over to put a down payment on the house,.

The question is, will lenders see this as a risk or should i consolodate it into a home equity loan. I will definately pay the credits cards off when I sell my house. Or should I get them paid off now.

Thanks

BECCA9892003 · Joined: 20 Jan 2005 Posts: 400 Location: Altoona, PA

the ones with the high interest i would say to pay off...but at this point you need to be careful...your credit score depends on what you do now...if they are all current and you can keep up with them ..your first concern would be to getting them all below 50% of what your limit is on each card..it will improve your score..but do not close them out...by closeing them out you will have a negitive affect on your score....once you sell your house i would still wait on paying them all off till your in your new house unless you need to to qualify for your debt to income ratio...it can be complex...if you need further help feel free to give me a call...814-946-9612

gripes · Joined: 02 Feb 2005 Posts: 2

Thanks Becca,

Right now my score I believe is 745. Most of credit cards are 0% interest. Its a huge amout of debt but I pay on time and never missed a payment.

So mantaing 50% of my credit limit will help. I have to look at the cards of what I owe and the credit limit.

Do banks mainly look at credit score or overall debt. Or is the debt ratio a main factor.

Thanks B

Nikko · Joined: 20 Jan 2005 Posts: 536 Location: Northern CA

Credit analysts claim that the ideal number of credit cards to have, in terms of score, is 3. And as becca said, your score will drop when the cards near their maximum limit.

Your credit score should not be an issue right now. Making sure that your debt ratio is low is more important. Traditional Fannie Mae loans require that you be at or around 30-35% DTI(debt to income). Most sub-prime lenders will allow you to go to 50-55%, but your rate will be higher.