When applying for a mortgage, what is better... earnings down your credit card or own money contained by nest egg?
When it comes to them running a credit report to see if I get approved for a mortgage... I have $10K contained by debt and nothing in reserves at this time (I'm investing $600/month towards my $6,000 down payment that will be required).
So... with my hot pay increase im geting soon, which is better... I pay down my credit card by $1000 a month for three months and still hold nothing in funds or is it better to pay down the credit card down by $500 and put $500 in stash (to show I have money in the bank) or... recompense the minimum on my creditcard and have a lot of money contained by my savings by the time they check my credit?
I know the debt/savings is factored in so i'm trying to see what is the best alternative to get approved. Suggestions?
Answers:
It depends on how your mortgage broker is doing the underwriting. If they're looking mostly at your credit rack up than pay down your debt so you have a suitable score. If they are doing more of a manual underwrite process than I would do the 50/50 split, and show them what you're doing and that you have a plan. Explain to your broker that you're increasing your savings so that surrounded by the event of an emergency you will still have money to pay your bills (like your mortgage).
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So... with my hot pay increase im geting soon, which is better... I pay down my credit card by $1000 a month for three months and still hold nothing in funds or is it better to pay down the credit card down by $500 and put $500 in stash (to show I have money in the bank) or... recompense the minimum on my creditcard and have a lot of money contained by my savings by the time they check my credit?
I know the debt/savings is factored in so i'm trying to see what is the best alternative to get approved. Suggestions?
Answers:
It depends on how your mortgage broker is doing the underwriting. If they're looking mostly at your credit rack up than pay down your debt so you have a suitable score. If they are doing more of a manual underwrite process than I would do the 50/50 split, and show them what you're doing and that you have a plan. Explain to your broker that you're increasing your savings so that surrounded by the event of an emergency you will still have money to pay your bills (like your mortgage).
Related Questions:
How does settlement of an underwater 2nd mortgage affect your credit?
My sister is trying to settle an underwater 2nd mortgage with her lender. She has remained current within all payments. Would a settlement for less than the full utility of the note affect her credit? What about if she arranged...