What I recommend is you hold onto the $30k in savings you have, and during the initial interview with your eventual loan officer, when you go over the sales price, loan amount, income and your monthly debts, an analysis will be able to be done to determine if your debt to income ratio is too high to be able to qualify. If it is, then whatever debt payments (credit card, car loan, etc.) are too high for you to qualify would need to be paid off using a portion of the $30k.
Plus banks always love to see that you have money in the bank for a rainy day, these are called "reserves", so if you used that money to pay off debt when you didn't need to, but you needed the reserves, it'd be hard to get that money back from the creditor you just paid off (remember you can't "borrow" money to build up your reserves). But there may not be any need to pay off your debts in order to qualify, so that is why I wouldn't recommend you do anything at this moment in time.
However you mentioned one item, and that is you'll be using your 401k savings as the down payment, is there any reason you are looking to do that instead of using the $30k in savings instead? Remember that borrowing from your 401k would not allow you to borrow that money later in case of a real emergency (perhaps buying a home is an emergency though), the money you are borrowing doesn't see investment growth, and there is even the chance that the loan would have to be repaid within a short period of time if you left your job or face fees/penalties/taxes. I know you didn't ask for that advice, but it is food for thought.
Let me know if you have more questions or would like further info.
this way you would be able to make sure that you are on your feet, in your new home before you
decide which way works best for you. We can also tell you which credit cards to pay down to boost your fico score up too! Would love to give you a free consultation!
Personally, and of course depending on the overall dynamics of your particular transaction, having a balance on your credit cards isn't a bad thing as long as you're not maxed out on your credit lines and you pay down on your balances instead of just paying interest every month on them.
In other words if you have a card with a $25k credit limit and only have $5k against that line at any given time then your credit availability looks good and your credit worthlessness is greatly enhanced ergo your score goes up.
But whatever you do don't cancel a line of credit either. Some folks are under the impression that having too many credit cards is a bad thing. It is if you're maxed out on them but if you have say 10 credit cards that yield $100,000 in available credit and you only have 16k against that 100k you've got 84k of available credit.
Now if you cancel say 50k of your 100k that takes your available credit down to 34k and could actually lower your FICO score. Make sense? If your 16k in credit card and auto loan debt is squeezing your credit availability then lower it in order to get a higher credit availability ratio.
But if it's not keep your money in the bank. Lenders love to see liquidity. Hope this helps.
If you need more explanation you can call me at 909 210-5598
It all has to do with your debt ratio. (Money going out as to money coming in) You need to check with your lender and find out what is needed to qualify for what.
If your credit card minimum payments and your auto payments do not harm you with qualifying for the home you want, then I believe you should leave it in the bank for the un expected items that come up when you purchase a home, but your lender is your best source for this question.
I have worked in the financial end of real estate for 7 years. What I can tell you is as long as your credit cards are below 50 % of limit , no lates and no lates on the car payment. It is much better to have the money in the bank . You will always have to show some type of reserves to the bank and the more the better. I hope this helps !