How much credit card debt did you all have when you obtained a mortgage? Our cc debt is a little over $4,000 now. We also have a new van (still owe $14,000). We had planned to pay off all of our cc debt and then apply for a mortgage. The problem is that we will not be finished until November or December. Our son starts school again in September. We would hate to pull him out of school mid-year. Sooo now we are considering purchasing a home in like August. I just wanted to know if others had cc debt when they obtained a mortgage or if they were cc debt free. We are blessed that the military will pay $833 (amt increases each year) of our mortgage every month until my husband retires in 9 years. However, we would need to cover utilities and home maintenance. In case it matters my husband's gross monthly income is $3,666. The total we must pay is $454(that is just minimum cc pymts and car loan combined). Of course, we would want to pay well over minimums as we are doing now(we currently pay approx. $700 each month towards cc debt). We realize that we would have to decrease the amt of that pymt if we obtained a mortgage. We are only able to swing it now because we live in military housing. PLEASE help! We were in financial trouble back in 1997 and I don't want to go through that again. We no longer use credit cards but I just want to make sure we are not biting off more than we can chew. Thanks in advance!
Unless you finance a home that will allow a house note of $833 or or less (so that you have a positive net cash flow from the military gift and no more rent), I would pay off the CC completely while living in military housing and then look for a mortgage ONLY after the CC debt is paid off. If you're only able to pay 1.6 times the minimum payment on your CC today (with rent), then you are right that you will not be able to continue snowballing the CC debt if your net mortgage note costs more than your rent payments now. And if you pay only the minimum on the CC debt, then you'll be paying that for years. I'd pay off the CC debt first...
Ditto on what Marci said. How old is your child? Where are you looking to purchase (how far away from where you currently live)? A suggestion you may have already thought about. . . Get an extra job and pay off debt before August. $4,000 isn't that much to owe. Money from an extra job can pay that off in no time. As long as you are responsible and committed to the entire amount going to your debt. Children are extremely resilient. It would probably bother you more than your child to move during the holiday break. In 12 to 24 months your child won't even remember before the move. However, if you move before you pay off your debt, you'll be paying long after that 12 to 24 month window. Play it smart and pay off your debt unless you just "have" to have that house. In that case, get the extra job and pay off that debt.
Thank you so much for both responses. I really appreciate it. Both of you have given me some things to think about. I think we will wait for now. My husband and I are going to discuss it a bit more. He reminded me a little while ago that he has a bonus ($1,800) that he will get mid September. Who knows? If we could really tighten up our budget and put even more on our bills(right now we are paying a little over a $1,000..combined..$700 to cc debt) and with that bonus, it may put us debt free a little earlier. Then maybe we could get the pre-approval in August but not move until late Sep or early Oct. I think the lender gives you two months to use the preapproval. Besides, I "think" the kids basically do a review in the first few weeks anyway. Anyway, I hope it will work out. BTW, my son is 8 years old. Thanks again for your responses. I think we will end up following your advice.
Just as an aside, we moved at the end of Feb into our first home, and we did not take the kids out of their existing school, the new school district buses our kids to their current school. So they still go to the same old school. Just a thought...
