July 19th, 2010 
DoUCWhatIC asked:
When it comes to them running a credit report to see if I get approved for a mortgage… I have $10K in debt and nothing in savings at this time (I’m investing $600/month towards my $6,000 down payment that will be required).
So… with my new pay increase im geting soon, which is better… I pay down my credit card by $1000 a month for three months and still have nothing in savings or is it better to pay down the credit card down by $500 and put $500 in savings (to show I have money in the bank) or… pay the minimum on my creditcard and have a lot of money in 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 option to get approved. Suggestions?
Sara
When it comes to them running a credit report to see if I get approved for a mortgage… I have $10K in debt and nothing in savings at this time (I’m investing $600/month towards my $6,000 down payment that will be required).
So… with my new pay increase im geting soon, which is better… I pay down my credit card by $1000 a month for three months and still have nothing in savings or is it better to pay down the credit card down by $500 and put $500 in savings (to show I have money in the bank) or… pay the minimum on my creditcard and have a lot of money in 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 option to get approved. Suggestions?
Sara
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Clifford
It depends on how your mortgage broker is doing the underwriting. If they’re looking mostly at your credit score than pay down your debt so you have a good score. If they are doing more of a manual underwriting 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 in the event of an emergency you will still have money to pay your bills (like your mortgage).