Home Buying in Louisville>Question Details

Johnnice Otis, Home Buyer in Louisville, KY

is it wise to get a loan to pay off $5,000 of debt on my credit report to buy a house and is there such a loan to get .?

Asked by Johnnice Otis, Louisville, KY Wed Feb 6, 2013

Help the community by answering this question:

Answers

8
Trevor Curran’s answer
Good morning Johnnice,

I'd recommend you locate and meet with a Local Mortgage Banker to get thoroughly prequalified for mortgage financing. The answer to your question lies in the prequalification.

I sat with a couple the other evening who are buying a new construction home and they had spent considerable funds to payoff credit debt before meeting with me. While I applaud the idea of eliminating a lot of monthly debt obligations as a person prepares to pay a mortgage, sometimes the money spent on that could be better used towards down payment or closing costs, or even reserves.


And if a person qualifies for a mortgage with the debt, well, the Mortgage Banker's role should be to advise the client accordingly so as to give the client the information needed to decide if that debt should be paid or not.

Trevor Curran
NMLS #40140
0 votes Thank Flag Link Wed Feb 6, 2013
I'm a local mortgage professional and I would be happy to meet with you and review your total financial situation. I can be reached at 502-314-5626. Call anytime.
0 votes Thank Flag Link Thu Mar 28, 2013
It would make sense only from the standpoint of consolidating multiple payments into one, which is also the type of loan you would be seeking, a debt consolidation loan.

Consolidating multiple payments into one may reduce the amount of the total of all of the payments you presently make and could also reduce the overall amount you pay based on the total interest you're presently paying on the other payments.

This could also help raise your credit score, with paying off all of the other payments even though you still have the same amount of debt. It still shows you are a responsible debtor and may help increase your chances of being approved for a loan.
0 votes Thank Flag Link Thu Mar 28, 2013
Why do you want to pay off $5,000 of your debt? If you get a loan to pay off $5,000 of debt, you will still have $5,000 of debt.
0 votes Thank Flag Link Mon Feb 11, 2013
Johnnice,

The advice of the others is spot on. If you are consolidating several high interest rate cc debts into one lower rate, that might be beneficial, but otherwise, you should focus your efforts on paying it off over the next several months and then begin saving for a down payment.

The one question I would ask is does this 5k debt prohibit you from buying a home? If it is keeping your debt to income ratio too high, then trading it for another loan will not help the situation. It will need to be paid down so your debt is reduced and brings your ratios into a qualifying range for your lender.

I can put you in touch with a couple great lenders here in Louisville if you need assistance.

I hope this helps.

Larry Gatti
Keller Williams Realty Louisville East
502-554-9445
http://www.AllLouisvilleHomesforSale.com
0 votes Thank Flag Link Wed Feb 6, 2013
Hi Johnnice,
I agree with Scott. A mortgage professional will be able to help you create a plan best for you. Give me a call or text 502-417-8527 or email me at marybeth@abgrealtors.com. I can recommend someone.
0 votes Thank Flag Link Wed Feb 6, 2013
If you can't scratch up $5,000 in three or four or five months to pay off this debt, you should reconsider a home purchase. Borrowing money to pay off borrowed money is a bad idea UNLESS the former is at ~25% and the latter at 6%. Don't create more debt!

Best of success in buying your home,
Annette Lawrence, Broker/Associate
Remax Realtec Group
Palm Harbor, FL
727.420.4041
http://RealEstateMadeEZ.us
0 votes Thank Flag Link Wed Feb 6, 2013
Trading one loan for another may not help you. you should ask your loan officer who should be able to give you teh pros and cons. The benefit would be if say you had several credit cards with high interest rates and you consoldated them into 1 loan with a lower interest rate.
0 votes Thank Flag Link Wed Feb 6, 2013
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer