Comments on: Save Money by not Using Credit Cards

By: Rush is a band

Rush is a band — Thu, 27 Nov 2008 05:51:59 +0000

You *need* to have a downpayment. The days of 0 down are long gone. In many declining markets (like Sacramento) you might even NEED 10% down. I would guess that 10% of a decent home in Sacramento is probably on the order of $20,000 to $30,000.

I'm guessing that you really need to save for that downpayment.

Credit scores of ~720 will qualify you for a mortgage and a decent rate. Above 720 doesn't really matter, but below 720 really does matter. My guess is that paying off the $3-4000 that you have recently paid off doesn't do too much to your credit score since your balance vs. credit limits are low and you continue to pay on time. I would check it every 3-6 months or so until you have your mortgage.

You need a downpayment… (have I said that yet Only because that's the best way to get a mortgage today, not because having one will really reduce your payment by that much.

Do you have any savings today?

good luck!
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By: RM

RM — Thu, 27 Nov 2008 05:49:59 +0000

You are doing great with your money. Continue to pay the minimum payments on the 0% cards and use the rest of your extra income to save for the down payment on your home. Save as much as you can. Your goal is to have a large down payment so that when you make an offer on a home it will be a strong offer. Sellers like to see a large down payment because it indicates the buyer is serious about buying their home and can most likely get the mortgage for the home. When you are ready to buy it is important to get pre-approved for a mortgage that way you know how much house you can afford before you start looking. I wish more people handled their money the way you have been. Best wishes and good luck in finding your dream home. :O) As March of 2009 approaches pay the rest of the 0% balance off.
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By: Melanie K

Melanie K — Thu, 27 Nov 2008 05:47:59 +0000

I would usually say to most people, it's better to get rid of the debt, but that's a lie. I would mostly say that to people who don't really have a handle on their credit cards.

But to tell you the absolute truth –

To have more money for the down payment is better. Just figure out the minimum you would need for the down payment and save up for that. When you reach the minimum, start taking chunks of the credit card.

With your credit score, the debt on your card means almost nothing, but it's always nice to have it paid off.
References :
I worked at a bank and just recently bought a house myself.

By: Mike

Mike — Thu, 27 Nov 2008 05:45:59 +0000

It doesn't matter what credit you have available on your cards.

Your down payment carries more weight than your credit score and your debt (to me at least) is low.

The bigger the down payment generally, the better shape your in to get a mortgage, at the lowest rate.

I would not pay off the cc, but save for down payment, research the best rate and check out banks with low fees, and make a good deal on the house.

In fact, prices continue to drop, I would start looking now, and any house I would want to buy, offer 60-80 cents on the dollar.
The market is desperate for buyers, lenders are not willing to lend, and you need to play hardball with the seller to get a good deal.
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By: Steph

Steph — Thu, 27 Nov 2008 05:43:59 +0000

Can't you do both?
Save more for the downpayment but still pay some on the cards (and don't put more on them).
For example I would do a 70/30 split.
Say you and your wife save $100 each a week, so $200 total at a monimum. $140 for the down payment, $60 for the creditcard. So you will have $4600 by january 1st and $2000 off your credit card.
If it were me I would try to double that amount.
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By: Joseph, II

Joseph, II — Thu, 27 Nov 2008 05:41:59 +0000

Seeing as how you seem to have a pretty good "handle" on your Credit Card situation (& KEEP it up- by ALL means!); I'd go for saving up for your Down-Payment on that House… Interest Rates are gonna start rising again pretty soon- as the Inflation from Oil prices starts to bleed into EVERYTHING we buy… So the MORE you can pay "upfront" on that House, the FASTER you're gonna be able to pay it off… Good luck!
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By: J. Philip Real Estate

J. Philip Real Estate — Thu, 27 Nov 2008 05:39:59 +0000

If your balances are only $5980 out of an available $80,000, your balance % is low enough to not need to pay off those balances and take advantage of the 0% rate. Simply put, using less than 8% of your available credit is certainly good enough. Lowering that from 8% to 0% will not make enough of a significant impact on your fico score to justify paying it off. The money would be better served by going toward your downpayment.

1) Yes, you should save the money and put it toward the down payment.
2) Your score will improve by 5-10 points, but since you are already over 700 the improvement will be negligible, since most premium mortgage programs require a minimum FICO of 700.
3) Stick with your plan and make sure that you get good rate quotes in writing from a reputable lender. Get a good faith estimate of your closing costs. Don't let them run your credit repeatedly, because that will lower your score. Enroll in a credit monitoring service so you can see your scores without a detrimental effect on your scores (checking your own scores is viewed differently than an application for credit.)Choose a good experienced agent with a track record and references to represent you in the search for that new home.

Best of luck to you.
References :
real estate broker
loan officer

By: Dom

Dom — Thu, 27 Nov 2008 00:37:13 +0000

Buying a house in January. Pay off 0% credit cards or save money for down payment?
OKAY!!! Here we go!

My wife and I want to buy a house in Sacramento in January but I am not sure what to do. Right now we have a combined usable credit from credit cards of about $80,000. Of this amount that we can use, we have $5980 in credit card debt with an interest rate of 0% that expires in March of 09.

Our credit scores a half a year ago was 719 and 721. Since we last ran the credit report we have paid down our CC debt 30% to the $5980 amount I have mentioned.

Now in previous situations with a 0% balance transfer card, I would pay the minimum and save the rest to gain interest. When the term is up, I pay the card off completely.

1) So should I save my money so that I can put more down on the mortgage?
2) How much will my credit score improve if I opted to pay all the debt and will it make a difference with the loan rate?
3) Recommendations?
By the way, DO NOT tell me about the dangers of credit cards. I know that already and my money is well managed. Just let me know about the question and that is it.