Am I better off paying down my credit card debt or using that money as a down payment for a home?

I'm wondering if paying down my credit card debt will allow me to get a better credit rating and better mortgage rate. Or, am I better off saving that money and using it as a down payment on a new home purchase.

Am I better off paying down my credit card debt or using that money as a down payment for a home?
the answer to that depends on your current credit score and the factors affecting it.





you need to meet with a reputable mortgage loan officer, have your credit run and go over your finances (income and assets) with them. if, with the scores the way they are, you qualify for a new mortgage while carrying the debt then the choice is yours.





if not, the loan officer should run a program called a "credit analyzer" which will tell you what debt to pay down and how much to pay and approximately what difference you can expect in you credit score.





the goal of raising your score is to have you qualify for ALL future credit (your new mortgage, future credit cards, car loans and leases etc) at the lowest rate possible.





keep in mind, many lenders are now eliminating no down payment and small down payment programs and many of the ones that are left require higher credit scores so the meeting with the loan officer and determining how best to use your money is a must. sometimes even a slightly larger down payment can make a big different in your rate / payment.
Reply:Having been in your situation before I would most definitely pay down my credit cards before buying a home. In fact I would pay off the credit cards and not have any debt. Learn to use credit cards in true emergency situations only and you will have a better life, I guarantee it. Good Luck!
Reply:You will have finished paying for the house if you continue paying a minimum payment on a credit card. Credit cards have MUCH HIGHER interest rates than a house ever will. pay off the cc first!!!!
Reply:U don't want to buy a home and have debt so pay your bills off, then buy your dream home
Reply:You are better off paying of your credit card debt first.





Credit Card companies charge compound interest. This means that the 18% APR rate compounds upon itself, thus, each month you are paying interest on the interest. This makes paying off the principal that much harder and more expensive. Purchasing a home will incur many unexpected expenses, so it is highly advantageous for you to put yourself in the best financial position possible before purchasing a home.





The interest rate you receive depends not just on your credit score but also on what type of loan you get, the size of your down payment, and the creditor's lending standards.
Reply:pay back what you have borrowed before you borrow more.
Reply:You can do half and half... it doesn't have to be either or. I think the most logical thing is to get rid of the debt you have which will automatically free up more cash to sock away for your down payment. You're still going to have a mortgage AND your credit card payments if you only use the available money for a down payment so what's the point. The mortgage rate of interest is gonna be ALOT less than the credit card interest. Your credit rating won't automatically jump but you'll have a better debt to income ratio by paying the cards off so that's the direction that I would suggest. Your home purchase will alot more than just a mortgage... taxes, insurance, maintenace, PMI, etc. so make sure you have all that covered. The best way to insure it is to get rid of the other payments you have now and then concentrate on making payments on the home and doubling up when you can.