Should my fiancee and I pay off our credit card debt before we purchase a new home?
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My fiancee and I have approximately $30,000 in credit card debt (mostly his). He thinks that we should pay off all that debt and put a smaller down payment down on a home, rather than using all our money for the down payment. I argued that we should not worry TOO much about the credit card debt and take care of it another way, such as re-financing our mortgage in several years and using that cash to pay off the credit card debt (since the interest rate would be much lower). Any suggestions?
Should my fiancee and I pay off our credit card debt before we purchase a new home?I'm going to make a guess here....
You are being offered a mortgage with a fairly decent interest rate....and in "several" years, they are going to increase your mortgage interest rate, right? But that's OK, because at that time the interest rates will drop big time, and you simply refinance the mortgage and save tons of money?
Is that what you were told? Did that tell you this was called a "balloon" mortgage?
I'm gonna give you a big warning..... be careful. What happens in "several" years when you try to get refinanced, and they don't give it to you? Did you know that thousands of people ran into trouble with these loans? They ended up filing for bankruptcy.....and now the large mortgage companies are getting wiped out from the people filing for foreclosures.
I know several people who fell for this trap. The original loan came with so many fees and closing costs that it pushed the loan to well over the value of the home. After several years of paying only interest, no lender would even discuss a refinance with them!
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