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Posted in Mortgage
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Question By
Ceddibear

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I don't know what to do with my money. I want to buy a house!!!
I have a "fair" credit score right now. There is this house that I really want which is a great steal on the market right now. I think I have until the end of the month to make my decision and go at it. Also this month, I am receiving a large sum check which I could put towards my credit card or a down payment on the house. The question is: Do I raise my credit score by depleting most of my credit (which is at 81%) or do I put the money towards a down payment on the house (which costs about $55,000)?

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Caution!

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If you only have to the end of the month to make a decision on that house, something rings "Caution!!!" in my mind.  Never buy anything big under pressure, especially a house. Also, I hope it is not a "fixer-upper" because I don't know of many homes that go for $55,000 except for manufactured homes in senior parks.  A fixer can be a big hole in the ground you have to pour lots of money into.

Housing costs are not the only expense.  You'd have utilities, taxes, insurance, and throw at least 25% more in for maintenance because something is going to need fixing.  I've done both renter and homeowner and know.

If your credit card usage is at 81% right now, that sends up alarms for potential lenders, including the VA.  Pay that off and work on keeping your credit card usage below 20% every month.  You do need to have a good credit rating to get most loans and the VA would check over that house to make sure it is worth their getting involved with.  If you can keep your credit card usage at or below 20% and save up some money, you may be able to get a really good house soon enough.  I didn't get my first house until I was nearly 40, so patience does pay off.

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