MMM, this is so hard. How much debt do you have and what kind. Is it student loans or credit card debt.

It's credit card debt, about $17,000.

I would say pay off the credit card debt. You don't want to get into the house and something goes wrong and you don't have an emergency fund or line of credit to help. You don't want to rack up more debt. I know it took you awhile to save but I think paying off the debt would be better. Unless, you can hold off and pay off your debt in a couple of months.

This is a hard one, but truly, making sure you have some money set aside in case of an emergency is critical when purchasing a house. In the long run, your home will give you a wonderful tax write-off, but credit card debt can sink you, especially paying interest every month.

If you could get your credit card debit paid off in several months (say three or four months), then buy your home. Or you need to ask yourself if you can afford a mortgage payment, a good amount to apply to your credit card debt, and new bills which will be surprising when you first move. Typically, heating/electricity is more, you will have set-up costs to consider, i.e., telephone service, garbage, cable, internet, etc., and then, there are the small things that add up, such as brooms, vacuums, sponges, cleaning products, window coverings, towels, etc.

You should be proud of yourself for having good credit, especially in this difficult economic times to pre-qualify. But do yourself a favor and get rid of the credit card debt. If there is anything that makes me crazy is the notion of having to pay someone else to use money.

My only debt is my mortgage and I love having control over my income. Yes, I use my Mileage Plus Visa for all my purchases throughout the month and then pay off the entire balance; I've made it a strict rule to never carry a balance no matter how large my bill. I refuse to pay interest to a credit card company. And I have to say, I love the financial freedom that not having debt allows me. I am blessed and very lucky, but I have also worked hard to make my financial life secure by not having debt. This means that I can save a sizable portion of my income and it makes my life so much simpler. And not having to worry about money alleviates stress and that is priceless.

I will share a thought that a good friend of mine stated when she bought her NYC apartment, she said, "I love myself enough to give myself a home." I remember when I bought my house, I kept thinking about this notion and it is really true. I love my home, it is a gift that graces my life. I love taking care of it, I love entertaining in it, I love working in my yard. It gives me and my furry babies so much joy and I love my neighborhood. Could life be any better?

I wish you the best of luck in whatever decision you make!!! Keep me posted.

Pay off the credit card debt. $17000, at probably 10-15% interest, that's a lot of money. Also, depending on how the mortgage payments/maintainance/fees compare to your current rent, if your monthly budget ends up getting stretched thinner than it currently is, that credit card debt will just keep growing. It's so hard, I know what it's like to have that own-your-own-home dream hanging out there within your reach. But in my opinion, your best bet would be to put yourself in a more secure position financially before taking the plunge into a house and mortgage.

Thanks, everybody! It is a hard decision. I have never had credit card debt before, I always paid them off each month, then I just got into a difficult situation and voila here I am. I hate having it over my head, but I also know that I would feel more financially stable if owned my own home. I actually was thinking that i should pay off the debt, but then I was worried b/c home prices are so low right now that I didn't want to miss out. But it probably is better to go into homeownership debt free.

It's the best to go in debt free. You never know what can happen once you get into your home. These ladies gave excellent advice. I, too am saving for a home.

Houses might go lower still..... maybe pay off some debt, so you have a cushion.... while watching the market....

Yes - the home market has not yet seen the bottom yet! Pay off that CC!! Plus - $17,000 for a down payment? Sounds like a hefty mortgage you'll be getting yourself into. Isn't these enormous mortgages a large reason for this economic fall? Don't do it if you don't have the money. Right now - your credit card is your responsibility. You borrowed the money and you need to pay it back - not buy something else. That's crazy. That's like if my friend borrowed $100 from me and after a year or so of saying she doesn't have the cash to pay it back to me...I see her come home with a new car. That would piss me off, wouldn't it make you upset? Plus - by saving that $17,000 I highly doubt your getting an APR bank interest rate of over 5% but I am pretty sure your debt has a rate of 10%+. So it makes the most sense to pay off the debt.

hmcmcd,

I was in the same boat that you are. I had my down payment, but then the housing market turned upside down. I decided to pay off my cc debt instead as I didn't think with the lending standards tightening up that I would qualify anyway. It wiped out my housing nest egg, but without making all of those payments and all that I'm saving in interest, I was able to recoup some of that money quickly. I was shocked when the following month I was approved to purchase my first home. Although I was disappointed that I didn't have the money right then, it has given me a couple of months to save up; when you are striving for something that you have wanted for so long, it makes all those other small purchases seem so insignificant. By avoiding meals out and skipping the shopping trips, I have recouped 1/2 of my down payment in 2 months time and put in an offer on a short sale. Knowing that the short sales take about 4 to 6 months on average to close, I should have all of the necessary funds and then some for my new home. Just remember that your debt to income ratio will be a lot better without all of those payments. I wish you the best with whatever you decide.

Pay off your crdit cards and save up for a house. Then pay off house asap while putting money into a roth IRA. A house is not a good tax right off. Pay it off early and use the money to save for retirement.

Pay off your crdit cards and save up for a house. Then pay off house asap while putting money into a roth IRA. A house is not a good tax right off. Pay it off early and use the money to save for retirement.

You definitely need to get the credit cards paid off first & a better way of paying them off instead of paying a little on each one is get all your credit card bills & write down the total balance & the minumum monthly payment required. Then you want to figure out the interest on each card & try to pay more on the higher interest ones because the more you owe the more your finance chgs will be if you don't pay the full balance each month. Also the ones with small balances just pay them off and get them out of the way & then it dosen't seem so overwhelming. As of today do not use your credit cards ( only for a dier emergency) & set yourself up a budget & ask yourself do I really want those shoes or a home. Also you said you were already pre approved for a loan did you have all these credit card balances on your credit when they approved you because if you did than I'm sure you didn't get a real good interest rate. When I went to get a home loan I owed three creditors & my broker made me paid them off first because it made a big difference in the interest rate. So if you wait & pay off your credit cards then go back & re-apply for a home loan now that you have your credit cards paid you'll see a difference in your interest rate. So If you buy your house first, in the long run you would pay more because of a higher interest rate than you would if you wait a year or how ever long. I wouldn't worry to much about houses going up to much in the near future it's going to be a while before you start seeing a big change in pricing going up. Also if your credit report shows any late payments or any thing that looks negative to a broker you want to get those off your credit report so make sure you call & tell them you want if off asap because your going to be approved for a loan & call all three Experian, Trans (I can't remember the names) because they will look at all three. Leave all good standing & high paid off balances on the credit reports. Bad credits worse than no credit. Then that will give you plenty of time to look at homes instead rushing into it & buying something you ended up regretting. Good Luck & you'll be fine.

I suggest paying off your cards first. I purchased my first home in December 2007, although I did not have my credit cards completely paid off. I was in a situation where I had a couple of savings accounts going and once I got the house, I started paying off my highest interest rate cards. I, too had been pre-approved and found a great foreclosure house well within my comfort zone. Just because you are pre-approved for a specified amount, you can find great homes for less. I planned it so that if something happened with my job and had to find another, I could take a lower paying job and still manage all my bills without stressing every month. Good Luck!

Also when your loan goes thru you first payment will be due in 60 days it's not like charging something & your first pymts due in 30 days so that gives you an extra month so your not in the poor house the first day & can't even turn your utility bills on because you have to save everything for your first pymt. One more thing you will have to learn to be very patient escrow never closes on the date on the contract & be careful at closing they might come up with extra charges you have to pay to close even when you thought you paid the full amount they can come up with out of the blue charges & check every penny they charge you. I put down 3300.00 that what I was told I had to put down to purchase my condo & the day escrow closed & I went to sign the papers & pick up the keys they said I had to come up with another 5500.00 to close. Thank God my mom was their & lent me the money otherwise I would of lost my dream home. If I can help you with any more questions I'll be more than happy to.

What I did was payed off 20,000 dlls of my credit card dept and had save about 500 dlls in my savings. Bought my house and my mortagage payments with out the credit card payments is great and less tressfull. I did needed to buy some items for the house and use my credit card again but my payments are affordable which I can pay them off in less then a year with no intrest till 6 months. It could be done....