Posted on: 08th Jan, 2013 10:24 pm
I am looking for a max FHA loan in my area ($375K). My middle credit score is 690, $210K in income, and the DTI with the new mortgage is around 25%, so I should be fine on that. The problem is I have around $35K in credit card debt with only $40K available. Thus, the credit utilization ratio is 90%. Would you recommend I pay down at least half of that before moving forward with the FHA process, or doesn't it matter?
Welcome Bonny,
As far as I know, the credit utilization ratio does not matter much when you want to apply or get qualified for a loan. Nevertheless, it will be a good option to pay down the credit cards and improve your credit utilization ratio and then apply for a loan.
As far as I know, the credit utilization ratio does not matter much when you want to apply or get qualified for a loan. Nevertheless, it will be a good option to pay down the credit cards and improve your credit utilization ratio and then apply for a loan.
Your credit score, income, employment, assets as well as debts are taken into consideration while offering you a loan. Before applying for the loan, I would suggest you to pay down your credit card debts.
If you are counting the credit card debt into your DTI caluclation, then I would not worry about paying down the cards. If you have an extra 15k or so to pay down, you might as well put more money down, and go with a conventional mortgage. If you put 5% down on conventional, you would have lower Mortgage insurance rate, and not have to pay the Upfront MIP that is associated with FHA. If you can put down 20%, then you would have no mortgage insurance at all. Good luck
While it matters..... It won't likely make much of a difference. It doesn't affect the rate at all.
I agree with other poster, put 10% down and go conventional.... all that money you save can go to paying off cards.
I agree with other poster, put 10% down and go conventional.... all that money you save can go to paying off cards.
