Pay off loan / obtain mortgage question?

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I am going to go to get pre-approved for a mortgage.

Right now, I have about 15,000 saved. I have a credit card balance of 3,700 that at 0% until June. That balance is the result of transferring a variable rate school loan that never seemed to be going down as I made payments.

Should I pay off the 3,700 credit card because that would lower my monthly expeditures, thus allowing me to be pre-approved for more? The way I see it, I’m not going to be able to avoid PMI; I’m no where close to having 20% down for what I’ll consider as homes I’m interested in, in the 130,000s.

If I pay down the loan, my monthly expenditures are less, and then I can afford more is my thinking. I don’t want to do a piggyback loan to avoid the PMI.

  1. Reply
    Jeanne R
    April 30, 2011 at 12:46 am

    Since the credit card debt is at 0% until June, I would pay it off before the interest rate goes up. The less debt you have, the easier it is to qualify for the pre-approved mortgage. I think that you are very wise to get pre-approval because the mortgage market is so crazy right now. Good luck.

  2. Reply
    April 30, 2011 at 1:01 am

    If the credit card is at 0% do not pay it off. You can always transfer the balance to another company in June that is offering you 0% to do so. If you are a first time home buyer..there are plenty of programs out there for you and you do not have to have anymore of a down payment than you already have. With that much down the odds are you will not be required to have mortgage insurance. That is usually required for people who only put less than around 10% down. Good Luck and be sure to shop around..there is a big difference in your research.

  3. Reply
    April 30, 2011 at 1:37 am

    I would pay off the card TODAY. You will still have over $ 11,000. Increasing the amount you can get approved for is NOT the reason. You can already get approved for MORE than you can actually afford.

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