Determine Best Way to Pay off Debt and Be Ready for Next Places

[Patrick Dean]

First, I don't expect others to tell me all of my solutions. i just want to know others' opinions on what may be the best path to my next place.

To summarize, we sold my house in November and walked away with $36k. With that, I have a lot to either pay off, consolidate, or a combination of the two.

I'm going to break down debt amounts in total and by monthly payment with scenarios of what my DTI may be when paying off certain amounts of debt/accounts.

Of course, we wanted to avoid private mortgage insurance, but the primary goal is to get debt paid off so I'm at a good DTI and so I can get my credit score higher for a lower interest rate.

We are planning on moving to KC from the Twin Cities area in the early spring, so we're allocating about $3k to moving.

So, we have about $40k in savings, including the money we made from the house sale.

Income=$24/hr, $3840/mo

Here's how the debt breaks down.

1) Credit card 1: 4021 bal, 183/mo

2) Credit card 2: 8032 bal, 218/mo

3) Credit card 3: 11084.30 bal, 133.49/mo

4) Credit card 4: chase 401.60 bal, 5.04/mo

6) Line of credit: 762.36 bal, 0/mo

7) Insurance (renter's & auto) 232/mo

8) Cell phone 33.14/mo

9) Student loan 1: 96.55/mo

10) Student loan 2: 126/mo

11) Personal loan: 250/mo, about $9k balance

13) Line of credit 2: 1900bal, 25.20/mo

14) Credit card 5: 463.09 bal, 16/mo =1429.42

15) Rent 1100/mo

=$2418.42 debt payments per month

So, $2418.42/$3840=.62979 DTI, or 63%. I hate that number.

Our thoughts are to pay 2-3 accounts off. We want enough to be able to move and put a down payment on a house. I'm going to most likely apply for the mortgage on my own since my wife may not be able to get a job right away when moving to KC. I should be able to telecommute with my job by the spring, so I won't need to worry about getting a new job.

Thoughts on how the debt should be paid off to get to a DTI that's acceptable for lenders for a mortgage? We'd look at 3.5% down for FHA or 3-5% for conventional. Ideal would be to have about $15-$20k left over for a down payment, IF possible after paying off debt/setting aside $3k for moving.

I greatly appreciate opinions on this. I want to be able to tell our potential mortgagor an idea of a plan to pay off debt so that he can sooner work on getting me pre-approved.  -Pat