Glassboro, NJ · Member since 2019 · 2 posts · 1 vote
I’m new to this whole site. I am currently living rent free, but need to move out at some point in the near future (no specific timeline yet, but in the next 2 years). Trying to figure out if it makes more sense to save up a larger down payment on a house or pay off school loans faster.
I owe 50k in school loans and pay $500 a month on them. They’re federal loans, so I’m not too worried about the interest rate. I want to buy a home around $150k, and currently have nothing saved for the down payment.
Saving up for a home would require me to not pay extra on my school loans. I can save a maximum of $1,000 a month to either put towards a house or the school loans.
Is there a certain amount that you would recommend for a first home down payment?
If you are living for free now, I would attack the student loans since they are hurting your DTI ratio and your down payment saving. Federal student loans will follow you everywhere until they are paid off.
Glassboro, NJ · Member since 2019 · 2 posts · 1 vote
6y
@Charles Carillo
Agreed, but I do need a down payment at some point, right? What’s a reasonable down payment to have for a first time homebuyer? Is there a certain threshold I should hit of debt eliminated before starting to save for a down payment?
I would speak to a mortgage broker or lender now even if you are not purchasing to figure out what is needed for per-approval etc. in the future so you can plan. FHA is normally 3% down; plus all of the closing costs.
Hanford, CA · Member since 2019 · 17 posts · 4 votes
6y
@Joe OMaley
It’s admirable that you have a place to live for free, and yet you aspire to move out. With that two year goal in mind, I believe you could obtain your home while still paying your student loans. Over the next few months, I’d recommend learning about seller financing. Essentially, this type of financing is when an owner acts as the bank and you pay him or her a monthly payment at an agreed upon rate and duration. There’s plenty of information out there that tells you how to find, negotiate, and structure deals such as these (start with podcasts and books, then network with those experienced). If you take action, I know you’ll get two birds with one stone. It’ll only be a matter of time.