Well, I currently live in a rental property and the lease will be up end of June. I am torn between renting for another year or saving up for the next few months (especially since tax season is near) for a down payment on a duplex (house hack) and FHA will require a 3% down payment ($12,000). My credit score is between 647-650, I know FHA's minimum credit score is 580. I'm thinking save up and only pay minimums until I can purchase a house and then pay off the remainder of my debt or clear my debt, renew my lease, and wait until the year is up? Help!!!!
If you have CC's definately pay that off before you start to save for a property. The cost of capital on your credit cards is far higher than what you will make in real estate.
Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
6y
Depends on the debt, also there are other options than signing a new full year lease, depending on where you are it is possible your lease will transition to month to month, if that is not the case and you've been a good tenant you could ask for that or a 6 month lease. You could also move to short term accommodations while you finish saving. I would say if this is high interest debt it will almost certainly make sense to pay it off first, if it is like a student loan at 5% it could probably go either way.
Thanks for the response Aaron! I have student loans but not too worried about it, mainly high interest credit cards! I am going to see which options my landlord offers. Thanks again for the input :)
If you have CC's definately pay that off before you start to save for a property. The cost of capital on your credit cards is far higher than what you will make in real estate.
If the credit card debt is high interest (e.g. 20%), definitely pay it off. You can then take a year to save, see how much financing you can get and take time to find yourself a good home. The last thing you want to do is use all your saving to buy a place and then have a vacant unit or unexpected repairs.
Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
6y
@Vanessa Lago yeah as everyone else has said pay off the credit cards, if you find yourself in CC debt paying it off is the best investment you can ever make.
Real Estate Agent · Post Falls, ID · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Vanessa Lago - If the debt is collecting interest over 10%, I would pay that off immediately. If not, I would make the monthly payments and start house hacking. The returns you get on house hacking will be far greater than 10%.