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I'm in need of sound advice. I will soon come upon approximately 47K as a result of my wife buying me out of the equity of our house (we have separated and in the process of divorcing). Rents in our area (Washington DC) are extremely high, if not higher than a mortgage payment, so I've thought of using that money to buy another home, albeit much smaller. However, I also have in excess of 25K in credit card debt and I would like to pay this off or at least bring the debt to a more controlable level. My question is: Which should be my priority, the purchase of a home or pay off of the credit cards? I would love to pay off my credit cards altogether, but I may be left with too little to qualify for the purchase of the home. I should mention that I would like to buy close to work to save on commuting expenses (which are very expensive in the area) but prices in that area are a little higher.

Greetings jungletiger,

Welcome to the Motley Fool!!

In my opinion, it would be to your advantage to get those cards under control. In fact, when you apply for the mortgage, the bank may require that the cards be paid as a contingency to the approval of the loan. I'm not sure if they will, but it is a possibility. Even if you have to pay more in mortgage interest to compensate for the card pay-off, its far less than the finance charge that the card companies charge...and it's a tax write-off, to boot!

You can get some excellent information about paying down the cards by reading through our Get out of Debt Feature, located at:

http://www.fool.com/credit/credit.htm?ref=PFinAg

I would also recommend you visit our Home Feature, located at:
http://www.fool.com/homecenter/homecenter.htm?ref=LN to get great information pertaining to purchasing and financing a home.

Both sites have dedicated discussion boards where you can post questions, but feel free to post follow ups here if you like.

Good luck to you, and Fool on!

Karen Kosoy
TMF Karen

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