wedding money- pay off debt vs downpayment

Ok so if you've read my other posts, you know my situation. Quick background: we're looking to buy a house within the next year. We are living in an apt in my parents house to save money. Hubby lost his job in Feb and is unemployed and looking. Another interview this week...fingers crossed!

We are debating what is the best thing to do with our wedding money. We got a big chunk. Hubby has some debt. Do we take ALL of that wedding money to pay off debts? Or take half the money for debts and save the other for downpayment? I hate to see all of that money go...I know we're going to have to get rid of that debt though and it will effect us getting a mortgage.

We are torn. I dont know who to speak to about financial advise. People at a bank? Who can help give us an unbiased opinion? I feel like what we do right now with this money and saving is going to be a big part if getting on our feet, yaknow?

sooo what would you do? TY!!!!

Re: wedding money- pay off debt vs downpayment

I would say to pay off the debt and start fresh. It's harder to save and to pay off a mortgage when there are other bills lingering around.

Re: wedding money- pay off debt vs downpayment

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Posted by SoontobeGallagher

I would say to pay off the debt and start fresh. It's harder to save and to pay off a mortgage when there are other bills lingering around.

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ITA

Re: wedding money- pay off debt vs downpayment

Pay off all your debt first. OR at least a large chunk.

It's a tough situation. On one hand- along with houses come many, many bills.

On the other hand, the market for buying is great and interest rates are low.

Re: wedding money- pay off debt vs downpayment

It depends on how big the chunk is.

Honestly I would pay down all your debt, because its going to be hard to do when your paying a monthly mortgage. We got into debt after we bought our house when DH went on reduced salary and we had to put things on our CC because we didn't have the $ coming in we had budgeted for. When he went back up on full salary we were able to stop adding to it, but its hard to get rid of any because we just make our payments. Its making us crazy. I would get rid of it now.

However, if the $ is enough to be able to make a down payment that is large enough to avoid mortgage insurance, then I would make the down payment. It will save you money in the long run.

Of course since interest rates are really really low, that is something to think about. They might not ever be this low again and in a year or two they might be higher.

Sorry I guess I am no help.

Re: wedding money- pay off debt vs downpayment

we were in a similar situation
what we did is to pay off the entire debt.
I did call the credit card companies and asked for the debt to be reduced and they do work with u. so Jackie try doing that - negotiating. both u and the CC company prefer not to have it go to collections and for them to receive something even 50% instead of nothing on for the thing to go on for years.
it is way harder paying that off with a house, plus having debt really hurts u getting the low rate. my suggestion (and this is what we are doing) is to wait on the house for another year, pay off the debt and start rebuilding the savings while ur DH is searching for a job.

Re: wedding money- pay off debt vs downpayment

PAY OFF THE DEBT!!

Re: wedding money- pay off debt vs downpayment

What we did was save 3/4s for a down payment. 1/4th went to debt. It worked out well, and we're in the exact same living situation.

We went to a mortgage counselor on Friday, who states for the type of house we want and t he amount of debt we have we'll be ready to buy a house in about a year.

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Posted by MLAngelo

It depends on how big the chunk is.

Honestly I would pay down all your debt, because its going to be hard to do when your paying a monthly mortgage. We got into debt after we bought our house when DH went on reduced salary and we had to put things on our CC because we didn't have the $ coming in we had budgeted for. When he went back up on full salary we were able to stop adding to it, but its hard to get rid of any because we just make our payments. Its making us crazy. I would get rid of it now.

However, if the $ is enough to be able to make a down payment that is large enough to avoid mortgage insurance, then I would make the down payment. It will save you money in the long run.

Of course since interest rates are really really low, that is something to think about. They might not ever be this low again and in a year or two they might be higher.

Sorry I guess I am no help.

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hahaha it's ok! it's tough! It's a buyers market, and you dont know how it will be in a year. Everything you are saying, is what we keep going back and forth on. My dad thinks house prices will keep going down, but who knows about the interest.

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Posted by JoanneAndJustin

What we did was save 3/4s for a down payment. 1/4th went to debt. It worked out well, and we're in the exact same living situation.

We went to a mortgage counselor on Friday, who states for the type of house we want and t he amount of debt we have we'll be ready to buy a house in about a year.

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Could you FM who you went to see? We need to talk to an expertise who will be unbiased with us, and we don't know where/who to go to. I'd appreciate it. Your plan sounds good! Thank you and GOOD LUCK!!!!!!!

Re: wedding money- pay off debt vs downpayment

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Posted by regy_k

we were in a similar situation
what we did is to pay off the entire debt.
I did call the credit card companies and asked for the debt to be reduced and they do work with u. so Jackie try doing that - negotiating. both u and the CC company prefer not to have it go to collections and for them to receive something even 50% instead of nothing on for the thing to go on for years.
it is way harder paying that off with a house, plus having debt really hurts u getting the low rate. my suggestion (and this is what we are doing) is to wait on the house for another year, pay off the debt and start rebuilding the savings while ur DH is searching for a job.

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thank you. This is what makes the most sense logically, i think. We have been calling to settle things. They definitely do work with you, which is helpful. I just hope he gets a job sooner, so we can save more. Good luck to you and your hubby, Regy...and thank you for the advice. :)

Re: wedding money- pay off debt vs downpayment

i said to save it and then use it for a down payment. it depends on what kind of debt you have though.

the only debt DH and i have is student loan-related. granted, it's a ton of money, but we have a 2% interest rate on our combined loans (though we aren't consolidating/merging our loans together). we both realize that our education will take 25 years to pay off, and we're in no hurry to try to erase that. if we had credit card debt or car loans, however, we probably would have paid that off immediately. we're pretty strict on not buying things we can't pay for upfront though.

Re: wedding money- pay off debt vs downpayment

It stinks but I vote pay off the debt. It is the best thing to do if your going to try to buy a home. Pay if off, and start saving for a down payment.

eta: We might be moving back to my parents too! Jon may transfer to NYPD, and we would sell our house here, and live with them to save and house hunt. We will be neighbors for a bit. Lol.

Re: wedding money- pay off debt vs downpayment

from someone who is currently going through the process, i would say pay off your debt. when you apply for a mortgage that is a huge part of what you will get approved for. and also, in the long run, how much you can afford to pay per month.

i would def get that off your back and just worry about paying for your home and home bills, and not have to worry about that stuff too.

hth.

Re: wedding money- pay off debt vs downpayment

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Posted by FinallyMrsB18

It stinks but I vote pay off the debt. It is the best thing to do if your going to try to buy a home. Pay if off, and start saving for a down payment.

eta: We might be moving back to my parents too! Jon may transfer to NYPD, and we would sell our house here, and live with them to save and house hunt. We will be neighbors for a bit. Lol.

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Thanks for the advice girls. DH and I are going to look to speak to someone about all of this, but I'm leaning towards taking care of his debt, and just save more while we live at my parents.

Nicole, awesome! Let me know if you move back here. Good luck to you and Jon!

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Posted by pandafish519

from someone who is currently going through the process, i would say pay off your debt. when you apply for a mortgage that is a huge part of what you will get approved for. and also, in the long run, how much you can afford to pay per month.

i would def get that off your back and just worry about paying for your home and home bills, and not have to worry about that stuff too.

hth.

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Thanks. Would we be denied a mortgage because of his debt? His credit score is really low, but mine is almost 800. Would that help at all?

Can we apply for a mortgage now, just to see, and then apply again next year? I dont know how the process works...

Re: wedding money- pay off debt vs downpayment

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Posted by jackieee

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Posted by pandafish519

from someone who is currently going through the process, i would say pay off your debt. when you apply for a mortgage that is a huge part of what you will get approved for. and also, in the long run, how much you can afford to pay per month.

i would def get that off your back and just worry about paying for your home and home bills, and not have to worry about that stuff too.

hth.

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Thanks. Would we be denied a mortgage because of his debt? His credit score is really low, but mine is almost 800. Would that help at all?

Can we apply for a mortgage now, just to see, and then apply again next year? I dont know how the process works...

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I would hold off and work off his debt and try to raise his score. If the two of you are applying together, this would be possibility. A hard inquiry on his credit score would only bring down his score.

Re: wedding money- pay off debt vs downpayment

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Posted by jackieee

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Posted by pandafish519

from someone who is currently going through the process, i would say pay off your debt. when you apply for a mortgage that is a huge part of what you will get approved for. and also, in the long run, how much you can afford to pay per month.

i would def get that off your back and just worry about paying for your home and home bills, and not have to worry about that stuff too.

hth.

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Thanks. Would we be denied a mortgage because of his debt? His credit score is really low, but mine is almost 800. Would that help at all?

Can we apply for a mortgage now, just to see, and then apply again next year? I dont know how the process works...

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i don't think you would necessarily be denied, it just might be at a lower number. so for example, based on your debt to income ratio, they might only approve your mortgage for 300,000 so the price of a house would have to depend on how much of it would be mortgaged. you can go see a mortgage planner and they can tell you what your status is in the realm of 'would i be approved for a mortgage' and how much.

Re: wedding money- pay off debt vs downpayment

I would pay off all of your debt. When the time comes for you to buy a house, it will look better if that debt is gone and your credit has improved a bit from it being gone for awhile. (Plus you'll save more money from not having tons of interest money being added on.) And since your hubby is out of work, right now is not the time to be buying a house anyway, so you'll probably have some time to save.

Re: wedding money- pay off debt vs downpayment

I think you should definitely get rid of all of your debt. It is NOT easy to pay all of the house bills unexpected things that may happen in the home, redecorating etc. Plus whatever debt you have. Getting rid of that would be a big help to you.