pay off student loans prior to buying?

[Anonymous]

We owe about 120k at rates between 2 and 3.5%. HHI is 250k. No kids. Robust retirement accounts. Liquid savings of 125k, much of which would go toward down payment. On the one hand, I understand the concept of student loans being cheap debt (although interest is not deductible) and that the house will be an investment (unlike rent). On the other hand, I cringe at the thought of servicing the debt while paying a mortgage, taxes, home maintenance, and day care (in the future), plus all the extras like decor. Need advice of neutral 3rd parties!

[Anonymous]

I would pay off the student loan. You have a nice income. Once the loan is paid off you can breathe easier.
For me, the less places I owe money to the better I feel. And the student loan is not going away ever

[Anonymous]

With interest rates that low, I'd put off paying down the loans.

[Anonymous]

Wait till you have kids , it will change your budget and lifestyle. meaning less money and wanting a larger house.

[Anonymous]

Is the student loan interest rate fixed or variable?

How secure are your incomes? If they are secure, is there any chance that one of you would want to take a lower paying job or stay home with kids? Even the federal government is less "secure" these days with furlough possibilities.

How do you feel emotionally about the debt?

For us, with a similar situation, we took out a lower mortgage amount (but luckily ended up with a good fixer upper house in a great area) AND paid off the debt aggressively. So thankful it is gone, especially as the economy has destablilized as the years have gone on. We now have no desire to take out a big mortgage, after paying off that debt... there are other investments which are much more promising IMO.

[Anonymous]

Anonymous wrote:We owe about 120k at rates between 2 and 3.5%. HHI is 250k. No kids. Robust retirement accounts. Liquid savings of 125k, much of which would go toward down payment. On the one hand, I understand the concept of student loans being cheap debt (although interest is not deductible) and that the house will be an investment (unlike rent). On the other hand, I cringe at the thought of servicing the debt while paying a mortgage, taxes, home maintenance, and day care (in the future), plus all the extras like decor. Need advice of neutral 3rd parties!

OP I am in practically the same boat. Would be curious to hear others' opinions. Leaning toward house at the moment.

[Anonymous]

Rent as cheaply as possible. Pay down the debt. Put (more) money aside for a down payment on a house.

On the future of DC-area housing, here's my two cents: one of three scenarios will occur: 1) housing will remain relatively flat while interest rates remain low; 2) housing will remain relatively flat as interest rates slowly rise; 3) housing will go down as interest rates rise.

Any doubters?

[Anonymous]

Anonymous wrote:Is the student loan interest rate fixed or variable?

How secure are your incomes? If they are secure, is there any chance that one of you would want to take a lower paying job or stay home with kids? Even the federal government is less "secure" these days with furlough possibilities.

How do you feel emotionally about the debt?

I think these are important questions. From your post it sounds like, emotionally, you would prefer to be out from under the student loans. With you HHI, make a 9-12 month plan and aggressively pay down the student loans. Then when you do buy a house, you'll feel more secure about it.

[Anonymous]

Anonymous wrote:Rent as cheaply as possible. Pay down the debt. Put (more) money aside for a down payment on a house.

On the future of DC-area housing, here's my two cents: one of three scenarios will occur: 1) housing will remain relatively flat while interest rates remain low; 2) housing will remain relatively flat as interest rates slowly rise; 3) housing will go down as interest rates rise.

Any doubters?

Wrong, in dc high appreciation for 2 years after rates rise housing will sightly exceed inflation. The people owning are in a far different loan situation then pre 2007.

[Anonymous]

OP, how much could you save in a year with your current expenses?

[Anonymous]

I wouldn't wait personally.

[Anonymous]

We owed 70k at under 2 percent interest rates, 150k liquid on 135k income and just bought. But we paid that down from 130k over last few years. We were crazy savers before kids.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Rent as cheaply as possible. Pay down the debt. Put (more) money aside for a down payment on a house.

On the future of DC-area housing, here's my two cents: one of three scenarios will occur: 1) housing will remain relatively flat while interest rates remain low; 2) housing will remain relatively flat as interest rates slowly rise; 3) housing will go down as interest rates rise.

Any doubters?

Wrong, in dc high appreciation for 2 years after rates rise housing will sightly exceed inflation. The people owning are in a far different loan situation then pre 2007.

Wow, that's a very precise prediciton. Remember, DC really didn't get hit hard when housing crashed in the rest of the country.

[Anonymous]

Housing will go up in DC area - all available space is being consumed ... look around you. Do NOT wait to buy, it is your only hedge. There is a lot of flexibility that can come with student loans - deferments if you end up with financial issues, etc.

[Anonymous]

if you tighten your budget how long would it take you to pay off the student loans? Granted they're at a low IR, but then so are mortgage rates (althought these are slowly creeping up)...that said, I, like a PP don't like being bound to anyone (be it mortgage, student loans, credit cards) and the less you are the better you and your spouse...and kids will be. I'd pay off the student loan(s) and then think it through - wants/needs and see if getting a mortgage is in the family's best interest. Relatedly, get E. Warren's "The Double Income Trap," some sound advice! Good luck!