According to Experian I am currently at 43% which they said is acceptable but they would like it lower to potentially give a larger loan/better rates. Experian says they calculate it based on your total of all minimum CC/loan Payemts for that month. In this situation would it make the most sense to do the avalanche method to reduce one of the larger payments as much as possible, or focus on paying off the one I can get done quickly but has less of a payment?
Edit: Relavent info I forgot to mention
We will be selling our current Condo and using the return to pay off the remaining debt, as well as using it to fund a downpayment to keep the new mortgage lower. We want to secure the mortgage before we look to sell to be able to complete any purchases made as soon as possible so their are no delays in the process.
Looking to reduce my Debt to Income ratio before getting a Mortgage approval
byu/Suitable-Opposite377 inpersonalfinance
Posted by Suitable-Opposite377
2 Comments
Do not buy a house until you are out of debt.
It is better to do the one that is using up the most of your DTI with the lowest balance remaining.
For example, paying off an $8000 loan that has a $500 payment vs a $15k cc balance with a $300/mo payment.
That being said, you should not be buying a house if you have outstanding CC debt.
The only acceptable debt when buying a house is student loan or car loan sub ~5%