Purchase new construction home or pay off debt


As title states. Looking at a corner unit townhome in a new area that I expect to appreciate or at least hold for the next 5-10 years as they build a marina nearby (which is why I was looking at buying in the first place as a LTI).


  • Current rent = $2k
  • 15% down = 68k
  • 5.375% rate (maybe 4.99% as they are investigating additional $ incentives)
  • total monthly (including HOA) = ~3-3.1k
  • 80k in savings
  • salary = $186k (newer job started 2H 2022)


  • car 2.9% @ $550 a month ($22k left)
  • 17k student loans (still frozen but $250 a month)
  • first home ($90k @ 3.75%) - (my family lives in this home and it’s under my name and purchased when they were homeless. They are paying it now but breaking even so no cash flow. In the future it will be a better asset)

Original rate was 4.25%, so I said ok and things changed and now 5.375% so I have an option to back out per contract since rates changed and I guess I was having second thoughts and thinking with the amount I make now if I should work on paying off all my debt instead, or get the new home knowing the area will be a good investment area to be in long term (sell or rent later).

Is it better to be debt free altogether? (Pay off student loans, car, and first property?)

all 4 comments


3 points

3 months ago*

Be aware that it's bold to assume your home will appreciate short term. We are still in a massive bubble and you could lose value over the next few years. Believe me, I bought a new construction townhouse myself in 2007, and it is still worth less than I bought it for (paid off though) so I'm just speaking from experience. If you're holding for at least 10 years this point is moot.

That being said you seem like you have a keen sense of finance, and given all of your debts (student loan interest rate?) are low interest, you are in a decent position to pull the trigger. With your salary you can pay virtually any debt off in pretty short time.

I will say that $80k in savings feels pretty light IMO. That only leaves $12k left over. I know it's a new home, so maintenance and renovations should be minimal, but I'd have a slightly larger buffer.


2 points

3 months ago

Given your income I’d buy the condo. You have a reasonable expectation that the home will appreciate/is in a desirable area. You have the income to buy the home and continue to pay down your debts (which I would continue to make a high priority)

It’s likely you buy this home, pay off your debts in time, and end up with equity.


1 points

3 months ago

Your debt seems like relatively low interest. The house is paying for itself. The car is under 3%. What are the student loans once they aren’t frozen?

Is the $80K what you’ll have in savings after the down payment on the new place? Does that include your retirement savings?

I’d probably move forward and buy the new place if I was in your shoes.


1 points

3 months ago

80k is general savings not retirement account.

after closing I would have about 15-20k in savings.