My wife and I have been paying off debts since we got married about 3 years ago. We have about 15k left in credit card debt, 1 car loan, and 2 student loans (one is very negligible @ < 4.5k). The original plan was to pay off all our credit card debt before getting a house, but we'd like to try to get a house 12-18 months. We're starting to put back money for a down payment (yes, I know my 1% interest is peanuts compared to what I'm paying to the credit card company) while also paying extra toward our balance.
In the process of paying off debts, we've paid off some really stupid ones (department store cards). So, now we have 8 paid off cards, and the one with the 15k balance. I'd read a while back that having low balances can be a red flag to lenders, as they fear that you might charge up your cards after getting a mortgage and not be able to pay the monthly payments. I'm thinking its fine to just close the 6 store cards that are paid off, but I'm unsure about what to do with the 2 credit cards. One is a high limit, is my oldest card, and has an annual fee. The other I am more comfortable keeping because it keeps a lower rate, no fee, and has a very small limit. Then there's also the issue of the 15k card, which is out of about 17k...so it's at high utilization.
We make about 104k per year, salary wise. What percentage of balance should I aim for on the remaining card, and how many of the paid off cards should I keep in order to be in great position for the best mortgage rates?