Pay off credit cards, or downpayment on a home?

[Ameesh]

you wont be able to get agreat loan of your asset to debt ratio is messed up. I'd say payoff the cards first and then get a house.

you should talk to the mortgage companies, many will be able to roll all of it up in one payment which would solve both problems but your rates wont be the best you can get.

 

[TreyRandom]

Originally posted by: Dacalo
Pay off those credit cards.

...and cut them up.

Dave Ramsey is The Man.

 

[JS80]

lol @ the noobs

Transfer those balances to low APR cards and buy the house.

 

[sdifox]

Originally posted by: Ilmater

Originally posted by: dullard
While there were many people here saying decent advice (ie pay off ALL of the CCs first), there was only one person I saw with the best advice:

Originally posted by: sdifox
If you have to ask this question, don't buy a house.

Bingo. Some people are capable of buying homes but who never, ever should buy a home. Ilmater, you are most likely one of those people.

You honestly think I should never buy a home?! My debt has been decreasing for years and this money gives me the option to finally put it behind me. I've been working with a financial planner (who I stopped working with when he lied to my friends and sold me things just to hit sales goals) and it has increased my FICO score a lot.

Understand, while $15k in debt is a lot and I accept that, I make a lot of money. I pull in $80k gross per year, and that growth in income has allowed me to pay off these debts faster. There was a time when I was in debt for $25k.

And that is exactly why you shouldn't buy a house. You have no concept of money. Especially if you make a lot of money and still managed to incur CC debt. And if you managed to get into CC debt while you have a financial planner, fire that sucker.

You sir, need a line of credit.

 

[KarmaPolice]

wouldnt you sleep better at night without the debt?

 

[thomsbrain]

holy crap. pay off the cards, first, duh.

how do you think you're going to get a decent home loan with that much debt hanging over your head? and how are you going to build equity if you've got those credit card payments eating up your budget? and you do realize that most of the first mortgage payments will go towards interest, not principle, right? so there will be no equity to draw on? and that paying two loans PLUS paying credit card interest for additional time is obviously not better than paying off the cards and having one loan?

 

[thomsbrain]

Originally posted by: Ilmater

Originally posted by: dullard
While there were many people here saying decent advice (ie pay off ALL of the CCs first), there was only one person I saw with the best advice:

Originally posted by: sdifox
If you have to ask this question, don't buy a house.

Bingo. Some people are capable of buying homes but who never, ever should buy a home. Ilmater, you are most likely one of those people.

You honestly think I should never buy a home?! My debt has been decreasing for years and this money gives me the option to finally put it behind me. I've been working with a financial planner (who I stopped working with when he lied to my friends and sold me things just to hit sales goals) and it has increased my FICO score a lot.

Understand, while $15k in debt is a lot and I accept that, I make a lot of money. I pull in $80k gross per year, and that growth in income has allowed me to pay off these debts faster. There was a time when I was in debt for $25k.

dude, i say this not to brag (because i have nothing to brag about!), but simply to put REALITY in perspective for you.

i make less than half your salary, and i support myself in the most expensive area in the nation. i've been working for a grand total of 8 months. you made more money in that same time period than i'll make in two years. yet you're a financial disaster and i'm doing well. i have zero credit card debt, drive a nice car, have a maxed-out IRA, and have far more cash in the bank than you got from your inheritance. i would not consider myself even close to being ready to purchase a home.

something is SERIOUSLY wrong with your spending habits, and certainly with your ability to grasp reality. until you wake up and smell the coffee, you will never be a candidate for home ownership.

 

[Captante]

Yet another vote for paying off the credit cards first .... its the only way to go. :thumbsup:

 

[b0mbrman]

Originally posted by: dainthomas
If the choice is between:

1. pay off credit cards
2. buy (x)

Always choose 1. Especially in this case, because saving for a down payment is usually a losing strategy even WITHOUT credit cards.

I've got tens of thousands in credit card debt right now and today I bought x such that x was a bagel.

Also, I have cash--enough to pay off the credit cards--just sitting in my savings account.

You say always, but I don't think I'll be doing #1.

 

[Indolent]

the fact that you have to ask this question is pretty sad...


side note: I wish I was just given $15,000

 

[Mark R]

Only one answer. Pay off all the cards immediately.

Don't even think about applying for a home loan/purchasing until the CCs are clear. Once the CCs are clear, you can build up ready cash for a down payment.

Yes, you have to wait. But the costs of borrowing on CCs are high, and the presence of CCs debt will reduce the amount you are subsequently able to get on a mortgage (which will be much cheaper).

If you make a down payment while you still have CC debt, you are only hurting yourself - you'll only be able to get a smaller loan, and you'll end up paying more.

There's the additional concern that the housing market isn't looking particularly sprightly, and prices may drop in the next 6 - 12 months. This is v. v. bad if you have a 0% down mortgage.

 

[IntrinsicValue]

If you can, transfer those balances to a 0% (or low-interest) card. Invest the $15K. Wait until the housing market declines (which it is forecasted to do within the next year).

Then re-visit this question again.

Hopefully by then you'll have about $12K in credit card debt (by continuing to make monthly payments), about $16,000 in your investments (with a modest 6.5% return), and the housing prices will be even more affordable.

 

[sdifox]

Originally posted by: b0mbrman

Originally posted by: dainthomas
If the choice is between:

1. pay off credit cards
2. buy (x)

Always choose 1. Especially in this case, because saving for a down payment is usually a losing strategy even WITHOUT credit cards.

I've got tens of thousands in credit card debt right now and today I bought x such that x was a bagel.

Also, I have cash--enough to pay off the credit cards--just sitting in my savings account.

You say always, but I don't think I'll be doing #1.

hahahaha, and your savings account is giving you a higher return than the CC interest charges?

 

[oboeguy]

Originally posted by: thomsbrain
something is SERIOUSLY wrong with your spending habits, and certainly with your ability to grasp reality. until you wake up and smell the coffee, you will never be a candidate for home ownership.

 

[BigJ]

Originally posted by: sdifox

Originally posted by: b0mbrman

Originally posted by: dainthomas
If the choice is between:

1. pay off credit cards
2. buy (x)

Always choose 1. Especially in this case, because saving for a down payment is usually a losing strategy even WITHOUT credit cards.

I've got tens of thousands in credit card debt right now and today I bought x such that x was a bagel.

Also, I have cash--enough to pay off the credit cards--just sitting in my savings account.

You say always, but I don't think I'll be doing #1.

hahahaha, and your savings account is giving you a higher return than the CC interest charges?

0% APR CC offers vs. 5% Interest Savings Accounts probably.

 

[edro]

The best option is to open an ING Savings account. Need a referral?

Nah, like everyone else said, you need to pay off the spiraling debt.

If you don't want to spend your $15k on it, at least transfer your balance to a few 0% APR credit cards. You will probably waste a few hundred in fees for transferring the balance, but it is worth it at those high interest rates.

 

[Inspector Jihad]

lol @ all the idiots. best bet is to go to vegas or ac and gamble. you'll definitely make enoguh to pay off the cards and buy your house straight up.

 

[AtlantaBob]

Originally posted by: dainthomas
If the choice is between:

1. pay off credit cards
2. buy (x)

Always choose 1. Especially in this case, because saving for a down payment is usually a losing strategy even WITHOUT credit cards.

 

[Adul]

having that much in C debt will make it harder to afford the house. pay off the CC.

 

[Adul]

depending on where you live and if you are buying a new home, chances are builders will cover closing costs on the house. But again be wary of builders to, some of them you really need to watch out for.

Now pay off the debt!
NEVER DO THAT AGAIN!
And then get your home.

Ever see the show big spenders?

 

[iversonyin]

Whats the interest rate you getting on the mortgage and whats the interest rate on the home equity? You can't get the best rate if you have those credit card debts sitting on your credit report.

 

[PingSpike]

Blow it all on lotto tickets and solve all your problems, FTW.

 

[b0mbrman]

Originally posted by: sdifox

Originally posted by: b0mbrman

Originally posted by: dainthomas
If the choice is between:

1. pay off credit cards
2. buy (x)

Always choose 1. Especially in this case, because saving for a down payment is usually a losing strategy even WITHOUT credit cards.

I've got tens of thousands in credit card debt right now and today I bought x such that x was a bagel.

Also, I have cash--enough to pay off the credit cards--just sitting in my savings account.

You say always, but I don't think I'll be doing #1.

hahahaha, and your savings account is giving you a higher return than the CC interest charges?

5% is still greater than 0%, right?

Ha ha, indeed.

 

[JungleMan1]

PAY YOUR CREDIT CARDS. Even if it means putting off your house purchase. You're not going to get much of a good interest rate if you have $15K in credit card debt hanging over your head, and you'll still be stuck paying interest on those CCs (even if it's less). Not to mention that you could pay those credit cards off tomorrow, whereas if you wait to find the right house (that alone can take months!), then TRY to get a home loan, pay your closing costs, then consolidate your debt, you'll accumulate even more interest on the CCs.

Also, if you make $80K a year (and no mortgage payments every month either!) and still have $15K in CC debt, you are not financially smart enough/responsible enough to be a homeowner. I realize that's probably offensive to you, but do something about it instead of denying it.

 

[Elbryn]

like others have said, if you make 80k a year and have had 25k in debt that you couldnt pay off in 2 years... thats pretty bad money management.
the second point is there are many ancillary costs to home purchase. with 15k down closing costs which can range into the 5-10k if you add points to the mortgage is not going to leave you with much of a downpayment, leading to PMI or a secondary mortgage at a higher interest rate.
not only do you have closing costs, now you have 5-15k furnishing your home, especially if you're doing this with your woman who will want nicer things. that doesnt count the added costs of buying a lawnmower, trimmer, snow shovel/blower, etc for maintaining the outside.
what are you going to do if you plunk the cash down for your home, still have the cc debt, and then your car breaks down? hit the cc's for more?
are you saving for your retirement? plug all of this into the larger equation and see if your management skills are up to the task.

that said, everyone has said the same thing but you'll likely do what you want anyway. its like having your mom tell you that you should have done something when you were a kid but you didnt think she knew squat and you did it your own way. learned then didnt you? i guess you'll learn now too 8)