Should I focus on credit card payment or save for mortgage?

I plan to purchase my home by the next summer. My current credit score is 750. I don’t have sufficient funds in my savings account. I owe around $5000 on credit cards. I am little bit confused. Should I pay off the credit card or save money for purchasing the house? If I can’t make a huge down payment, then I won’t get low score on my mortgage.

2 Answers

Your score doesn't seem to be too bad but when you have $5000 on your credit card debt, you should pay them off so that your DTI ratio can be decreased. And if you take out a mortgage loan without saving enough money, you may fail to make the 20% down payment and this may make you qualify for the PMI or the mortgage insurance. Save enough before taking out a loan.

Save money and pay off the credit cards first. If the lenders find out that you have not paid off the credit card, then they will believe that you're a irresponsible borrower. They would not like to lend you money in that case.

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