Pay off student loans or save for down payment on a house?
I have about 100k in student loan (interest rate 6.8% fixed). Interestingly, I estimate that my expected saving in the next two years after living and other expenses to also be 100k. Houses are expensive in my area, currently an average single family home are around 500k (or maybe more), banks now typically ask for 20% down payment, so I need to save 100k before I can purchase a home.
So the question is, should I use my excess income to pay down my student loan or save for a house?
Pay off student loans.
Student loans can not be discharged in bankruptcy. They are with you until you pay them off. So, if your job situation took a drastic turn for the worse in a few years…you’d still have to contend with those loans. But, if you are in a strong job situation and can pay those loans off…..you will never have to worry about them again.
I’d focus on knocking that student loan debt out. Once that’s paid off, you will be in a much stronger position to buy a house b/c you will have one less monthly bill (which means you can afford a larger mortgage or save that money) and your credit rating will be higher once that debt is paid off.
I paid off my student loans before I purchased my house.
