Debt Ratio...dealbreaker?

[Yadira Gutierrez]

Hello BP Community!

I will be making offers/bids for HUD and Fannie Mae homes soon. I would like some guidance in terms of how to approach applying for the loan.

I currently have 2 credit cards and 1 personal loan for a total of approximately 6k. I do not have any other debts.

I am selling my house so I expect to have enough money for the down payment and all other fees. However, I currently have some money saved and I do not know what should be my strategy.

Should I pay off the debts now and use the money from the selling to buy the new one?

Should I keep the money and use it to put a contract on the new home? And then pay off the debts?

I do not know if paying the debts is the right thing to do before applying for the new loan considering that I am trying to do both pretty much at the same time.  Would those debts interfere with the approval? Or, is it so little money that paying them up-front would not really affect the qualification too much? 

Looking forward to hear from the masters!

Yadira

[Marty Lehman]

You should speak with a mortgage professional and get preapproved.  Once we pull a clients credit and review their debt to income ratio, we can advise if paying off the credit cards would make any difference.  I would be happy to help you if you are not already working with someone.

Marty