Financial Help (family asking for advice on how to reduce debt so they can qualify for higher mortgage amount)
$25,000 in Savings
Visa credit card (19% interest - OUCH!) - $10,000
Line of Credit @ 5.45%: $50,000 (maxed)
Auto loan - vehicle 1: $11,200 vehicle 2: $8,000 auto loans at 1.9% and 2.9%
I don't know their credit score. I did not talk to them about their income (which I know would be ideal). But from what I know, I would estimate as a couple they make $120,000/year before taxes. They have 2 kids. They currently rent at their parents in a cottage (cheap rent) and so they want to be able to buy their own home.
IMO, they need to analyze & track their expenses and start thinking about their monthly bills and start being mindful of what they are buying/paying for. Pay off their highest interest rate debt first (Visa first then Line of Credit) and maybe leave their auto loans. Use $10,000 from their savings to pay off that VISA card asap and switch to paying off their credit card monthly. Once they have that paid off, is there anything they can do to put a potential mortgage & their line of credit together?
Reason: added detail to title for clarity