I'd PAY OFF all those debts before takin on still more debt!!! You should be in savings mode, not buying mode.

I was thinking that consolidating debt into one payment would help us to save more each month. Your thoughts?

It might be good if the new loan is a lower interest rate and you put all your money toward that one new loan.

Credit scores can be tricky - for example, as mentioned above closing out accounts counter-intuitively lowers your score. I advise going to a local bank or credit union and speaking with one of the loan officers before you do anything. They should be able to explain to you whether your plans would improve or worsen your chances at getting a good rate on your mortgage.

Thanks to all for taking the time to assist me with your answers. Special thank you @freeoscar - I have already made arrangements to visit my credit union as you suggested.

Good advice from freeoscar. Also they can help you figure out how much of a house you can afford

Your can also start a pre-qualified application (not pre-approved) and see how you fare. You will learn where you are failing and get the opportunity to straighten that out. Not all debt is considered bad debt, so address those credit cards and car loans first.

I know you may be able to save some dollars if you consolidate your debt into one loan, but consider if you pay off your credit card, you still have that borrowing ability. Sure, the lender sees a 0 balance, but also sees what your credit limit is too. So, 0 balance or not, your $26,000.00 credit limit is still taken into account.

You get all these offers from credit companies to increase your limit. Don’t do it.

Again, the effect of increasing your credit limit (if offered) can have different impacts on your ability to get a good rate (and on the size). It may seem counter-intuitive, but the higher your UNUSED credit lines, the higher your credit score (in most cases), so increasing your credit line (again, if kept unused), is usually a good thing.

And the reason for this is that the mortgage lender feels that if you lose a job or have a huge unexpected expense (car repair, etc.), that you'll have the ability to fund it, and use your cash towards paying the mortgage. And should you end up in dire straights where you blow through all your credit and default on your mortgage, all of that credit card debt is unsecured and doesn't impact the return they'll see from foreclosing.

That aside, I'm happy you are going to speak with someone, particularly at a credit union. While they're not all angels, they tend to be much more consumer friendly and knowledgeable than banks are (I'm looking at you scumsters Wells Fargo).

It's a bad idea to consolidate the debt. Studies show that individuals who do the consolidation tend to continue to spend and accrue even more debt. They fail to learn the lesson of restraint. Dave Ramsey has written a bunch of books on reducing debt and living within your means. Be very cautious of anyone offering debt consolidation services. Many of these are scams.

Closing accounts will hurt your credit score. You should leave the accounts open and with a zero balance. This will increase you credit rating.

The best course of action is to organize a payoff schedule. Start paying off the current debt. This will improve your credit rating at the same time you are reducing debt. There are a lot of ways to organize the effort. The most important thing to have is an organized plan. Some people pay off the small debts first while making smaller payments on the big things. This reduces the number of debts and provides a sense of accomplishment as an account is cleared. Others pay an equal amount on each debt. Many will pay down the highest interest rate debts first. You just have to decide what you want to do.

The bottom line is you need to be debt free with savings in the bank before you undertake a home loan. That only happens with planning and discipline. Houses and home ownership cost a lot more than the down payment. Slow and conservative is the way to go.

Rule #1: remember you have different credit scores from different agencies. Financial institutions often have their own INTERNAL scoring system, although they will always pull your financial score from one of the 3 major agencies.

Rule #2: if you can post to a forum, you can Google for information that will help you become a better-educated credit user. So please, make that effort. Credit scores are a small part of your overall financial health. I, too, have overused credit in the past and it takes both education and discipline to learn to utilize it properly.

Rule #3: you don't need to be debt-free to be given a home loan, but a house is always in need of regular maintenance and your desired updating. Don't expect to always charge those future expenditures! My plumber takes a charge card, but my contractor only took checks for that five-figure MBdrm remodel, as did our roofer for his five-figure project.

In general, following the FICO (the score from Fair Isaacs) is the most mainstream. Other agencies are usually within 30 pts or so of theirs, either way.

This is how Fair Isaacs rates a score:

What goes into a credit score?

Data from your credit report goes into five major categories that make up a FICO score. The scoring model weighs some factors more heavily, such as payment history and debt owed.

• Payment history: (35 percent) -- Your account payment information, including any delinquencies and public records.
• Amounts owed: (30 percent) -- How much you owe on your accounts. The amount of available credit you're using on revolving accounts is heavily weighted*.
• Length of credit history: (15 percent) -- How long ago you opened accounts and time since account activity.
• Types of credit used: (10 percent) -- The mix of accounts you have, such as revolving and installment.
• New credit: (10 percent) -- Your pursuit of new credit, including credit inquiries and number of recently opened accounts.

Personal or demographic information such as age, race, address, marital status, income and employment don't affect the score.

(* my asterisk: credit agencies in general do not want to see more than 35% used of your total aggregate revolving/installment credit lines)

Debt consolidation doesn't fix the problem. You still owe the money. People seem to think that consolidating some how helps, but usually the issue is spending habits/behaviors (believe me, I know... I've been there).

First things first (and hopefully you've already done this) - get control of your money & stop spending. I recommend Dave Ramsey's Total Money Makeover Book. Great advice and it changes your way of thinking, especially when it comes to debt. Dave would tell you that moving your money around (consolidating) isn't going to fix the issue, especially if you have issues with out of control spending. He always says personal finance is 20% head knowledge and 80% behavior. If you follow his baby steps (which are pretty easy) you'll be doing yourself a huge favor financially. Good luck :)

Loan is a very serious thing. I say so, because a lot of people don't understand, that this money isn't real one, I mean, that it gives illusion, that you are rich one, but truly, you are the debtor, who has to return them back, moreover, with the pro cent. Otherwise, you will lose something, that you have used as collateral or even met with the collectors, whose will make you understand, that you aren't right. Likely for a lot of people, that besides crazy collectors, additionally there are Private Debt Collectors, which make all possible for peaceful conflict resolution.