To buy or to payoff debt?

Question

Hello,

I’m 31 and weighing my options on whether to buy or wait until I pay off my debts. I have 2 loans totaling to $20k. I make $90k
a year and have saved enough for a 3% down payment on a home under $300k. The monthly payment on both loans combined cost me $600 a month. I feel like at my age if I can buy something I should but I also know the power of being debt free. Any suggestions or encouragement?

Dominic Conway · Answer

Account Closed If I went all in and focused on paying off my debt it would take me about 13 months given my current savings rate. I have already been preapproved for over 300k which is shocking to me. So I have all the means to buy something around the 170k-250k range in an area that I know is pretty well regarded.

Account Closed · Answer

I was in a similar financial situation about 2 years ago, though not trying to buy a house. I had credit card debt. I paid it down aggressively over a year and have kept it at zero since. You could probably do the math on your interest rates and what you'd make on the house and figure out the technically correct financial answer. Depends on how you feel about personal debt. I personally hate it and I love not having any debt other than a mortgage. I don't plan to have a car payment again (go used) so my only debts are my 2 mortgages. That makes me happy and it's hard to put a price on that. From your post it sounds like you want to pay off your debts first, and looking for someone to agree with you. If that makes you happier, I'd do that. How long would it take you if you focused on the current debt?

Todor Ialamov · Answer

@Dominic Conway

Buy debt right now. Interest is still around %3 while inflation is almost %7. No brainer in my opinion.

Bud Gaffney · Answer

@Dominic Conway buy buy buy! Pay off your debt with your rents…other peoples $ :)

GO GET EM

Theresa Harris · Answer

How much are you paying in interest, how much will a bank lend you and will the debt prevent you from being able to borrow enough to buy a home?

Bruce Woodruff · Answer

Buy now. You can get out of debt later. And I am an anti-debt guy. But the sooner you get into RE, the better, esp the way things are looking......