house or debt?

**rachelMcK** · 12-03-2008, 08:18 AM

With the economy being what it is, I have a question. We were saving up for a downpayment for a house. Not sure if that is a wise thing, buying a house when everything is so up in the air. We also have $30K in debt (student) that should be paid off. Would you pay of the debt first or buy a house? or would you pay off half the debt, buy the house, then focus on the rest? We are 24 and 25 years old and would like to start a family soon, but we did want to have our own house before that so we're just trying to gain some opinions!

Thanks!

**PrairieRose** · 12-03-2008, 08:31 AM

Hands down, in this economic situation (and most any other as well) I'd pay off the debt first. I know this probably isn't what you wanted to hear but if you do that, then you'll have such a better foundation when you buy your home (with a 20% down payment

). You will never be sorry, I promise.

**57plymouth** · 12-03-2008, 08:33 AM

Pay off the debt. Then buy your house. If you only have one payment to worry about, the economic situation is not so grim.

**Denvergirlie** · 12-03-2008, 08:53 AM

Get rid of the debt.

You can not have your education taken away should you fall on hard times, but you could lose a house.

**BlessedMomof2** · 12-03-2008, 09:35 AM

I would pay off the debt, then focus on buying a house.

**itlw8** · 12-03-2008, 09:38 AM

not sure if this is the correct thing to say but It depends. What are the interest rates on those student loans? And are they fixed. If they are private loans that the interest can co up they are your #1 priority.

If they are fixed I would do some of both.

no cc debt???? great! if you do pay it off
fund an emergency account
pay the student loans
and save a 20% down payment plus closing costs

Do all this and you will be set to buy that house.

And when you buy remember do not buy more house than you can afford. If you will want to stay home a bit with that baby you will have to be able to make the payments without your income so start now. Live on his income and save all of yours toward the house and snowballing those loans.

**rainbowgc** · 12-03-2008, 09:55 AM

I say pay off the loans and then use one income to snowball a down payment for a house. I think it will be an excellent time to buy a house up to 2 years from now.

**jamie79** · 12-03-2008, 09:59 AM

DEBT, DEBT, and DEBT

**Greebo** · 12-03-2008, 10:31 AM

Originally Posted by rachelMcK

With the economy being what it is, I have a question. We were saving up for a downpayment for a house. Not sure if that is a wise thing, buying a house when everything is so up in the air. We also have $30K in debt (student) that should be paid off. Would you pay of the debt first or buy a house? or would you pay off half the debt, buy the house, then focus on the rest? We are 24 and 25 years old and would like to start a family soon, but we did want to have our own house before that so we're just trying to gain some opinions!

Thanks!

Pay off the debt first. Live on next to nothing, rent cheap and dirty, pay it off fast, and THEN save up the downpayment.

My $0.02.

**vigilant20** · 12-03-2008, 10:37 AM

Well I'll be the odd one out. In this market, I'd think you could save a lot more money in the long run by buying a house now when it's undervalued. That's what I did. But my only debt at the time was $10K car loan (interest free) and $2K student loan (low interest).

**FrugalMomof3** · 12-03-2008, 11:43 AM

Pay off your debt first. Then get a home.

**Greebo** · 12-03-2008, 11:47 AM

Originally Posted by vigilant20

Well I'll be the odd one out. In this market, I'd think you could save a lot more money in the long run by buying a house now when it's undervalued. That's what I did. But my only debt at the time was $10K car loan (interest free) and $2K student loan (low interest).

Not to start a debate on this, but I strongly disagree with this. Buying a house when you're not ready, to *maybe* save money in the long run (assuming houses go back up sometime soon), isn't in my view justification for the risk. If things go south, and you can't pay the mortgage OR the student loans, then it'll cost you more than if you had waited until you were in a strong, solid position to buy a house - that being, debt free with at least 20% saved.

**monkeywrangler71** · 12-03-2008, 11:57 AM

Not yet! The price of houses haven't dropped here, and they are still building. I personally don't think it's a very good time to buy. Wait until GM goes under next year. I'll be ready to go home by then, I'll probably have to give my house away.

Your student loan interest is tax deductible (unless it was a bank loan to finance your studies and not an actual student loan). Is it a good interest rate? If the rate is high, I would pay it asap, if not I would do half to debt payment and half to down payment savings, then you'll feel like you're moving ahead with your dreams and won't lose faith. Plus you want to have the money available when the housing deals start.

You should have a 20% downpayment. If you have 10% your mortgage will be more expensive because you have to pay CMHC insurance. Also, you will need a big chunk of change for closing costs. I can't remember how much though, as ours was all paid by the company when we relocated - I think about $6000.

**vigilant20** · 12-03-2008, 11:58 AM

Originally Posted by Greebo

Not to start a debate on this, but I strongly disagree with this. Buying a house when you're not ready, to *maybe* save money in the long run (assuming houses go back up sometime soon), isn't in my view justification for the risk. If things go south, and you can't pay the mortgage OR the student loans, then it'll cost you more than if you had waited until you were in a strong, solid position to buy a house - that being, debt free with at least 20% saved.

The OP doesn't really specify whether they are "ready" or not. There's no information on much much they saved already. I read it that they had money saved already and were deciding what to do with it, but the post isn't really clear.

If things go south and you already spent the money either on debt or on a house, you aren't in a good position either way. And certainly a better option than throwing money away on rent any longer.

I am single, have a dependable job even in this economy, had no money down, got a low interest loan, have relatively little debt, and feel it was a safe and prudent investment.

**Greebo** · 12-03-2008, 12:07 PM

Originally Posted by vigilant20

The OP doesn't really specify whether they are "ready" or not. There's no information on much much they saved already. I read it that they had money saved already and were deciding what to do with it, but the post isn't really clear.

Right - but my position is - if you have debt, you aren't ready, period.

If things go south and you already spent the money either on debt or on a house, you aren't in a good position either way. And certainly a better option than throwing money away on rent any longer.

Well - no - because if you lose the house, you don't lose the liability for the mortgage. If you lose the house, and it sells for less in foreclosure than you borrowed, you're stuck with the difference, and so you would definitely be in a worse state than if you had rented and paid down debt.

Also - you don't "spend money" on debt - you SPENT the money already when you took on the debt. You do keep spending money on interest though.

I am single, have a dependable job even in this economy, had no money down, got a low interest loan, have relatively little debt, and feel it was a safe and prudent investment.

I'm married, also have a fairly secure job, had very little money down, have a ton of debt, and I think it was a fricking mistake to buy another house when I did.

BUT - When I had less debt, I thought it was a good idea too. So I get where you are coming from.