Pay Off Debt Before Purchasing Home

Added June 2, 2004 by Ilyce R. Glink

Summary: If you're serious about buying a house anytime soon, it's important to know whether you will qualify for a home loan. If you're saving money for a down payment, but paying credit card debt, you won't get yourself anywhere. Pay down those cards so you're debt-free when it's time to buy your home.

Q: I am very interested in buying a home, but am not sure if I am close to the process. I have perfect credit, about $15,000 saved, but I have about $9,000 in debt.

Do you think that I will be able to qualify for a home loan, or should I pay off my debt and save more money before I consider buying?

A: You've fallen into the classic home-buyer's trap. You're paying 16 percent or more on your credit card debt, while earning less than 1 percent on your $15,000 in savings. While it's fantastic you've managed to save that much, you're actually slowly going broke by paying so much in debt each month.

Take $9,000 and pay off your credit card debt today. Make sure you pay all of your other bills on time. Then, take all of the cash you would have spent on your debt, and plow it back into your savings account. In no time, your account balance will be right where it is today.

While you could probably qualify for a home loan now, you'll have an easier time qualifying after you pay off your credit card debt.

If you'd like to help us out, you can contribute to our site and keep the site free of charge. Thanks.

© Ilyce R. Glink. All rights reserved. This content may not be used, distributed, syndicated, compiled or excerpted in any medium or form without written authorization from Think Glink, Inc. For information on syndicating ThinkGlink.com please contact us.

Rate this article

  • Average rating of 5 from 1 reader

Comments

No comments have been posted.

Post Comment

*Required Field



Signup for our newsletter

Visit The Blog

Latest blog posted on 03/14/2010

Ilyce Glink Show Notes - March...