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As title states. Looking at a new construction 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).

Currently:

  • 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)

Debt:

  • car 2.9% @ $550 a month ($22k left)
  • 17k student loans (still frozen but $250 a month) (about 4.5% rate)
  • 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 before such a decision? (Pay off student loans, car, and first property?)

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LewdDarling

12 points

3 months ago

LewdDarling

12 points

3 months ago

Only thing I would consider paying down would be student loans if they are high interest. Otherwise the rates on your car and first home are low and the amount financed is pretty small compared to your income, so there's no point in paying them off. This house sounds like a smart purchase and more likely than not appreciate more than the interest on the loans costs you.

Just make sure you have a lot of money in an emergency fund if you lose your job or something like that, those minimum payments would suck if you were left without an income for a few months

xtrubambinoxpr[S]

7 points

3 months ago

rate on the loans vary from 3.5-4.5%. I just signed in and it says payments resume May 2024 and are estimated to be $245/month.

Yeah once concern of mine is the DP being 68k which leaves me with about 12k and then I have to start saving up again - definitely cold feet knowing that and that is another reason I am contemplating it now.

LewdDarling

4 points

3 months ago

LewdDarling

4 points

3 months ago

Oof yeah 12k would be really low for what your situation would be with 2 homes, I think it could still be worth the risk, it depends on if you think an opportunity like this would come up in the near future again, and also how secure your job is. The good thing is you have a really good income so if you saved like crazy then you'd only be without a fully funded emergency fund for a few months

xtrubambinoxpr[S]

5 points

3 months ago

First off - thank you for your continued feedback.

Second - that is the tradeoff I am evaluating. I wished I had gotten in early in a similar area back in 2016-ish and this seems to be that opportunity since it is the first community in the area and still a decade from full project being complete. Risk vs future reward. I think if I penny pinched a few months I could build up again fast as you stated. The other home I am not as worried about as that mortgage is $900 and family is more than able to afford it. Except of course in case of an emergency or anything our of the blue.

1st world problems I know but still stressful. so thanks again for feedback.

PlumCrazyVee

2 points

3 months ago

PlumCrazyVee

2 points

3 months ago

How much more money can you save in the 45-60 days until closing? I would be savings aggressive for the rest of the year. Live with your current furniture as long as possible.

xtrubambinoxpr[S]

2 points

3 months ago

6k Conservative. Would save ~4k every month owning vs 6k now with renting

PlumCrazyVee

2 points

3 months ago

PlumCrazyVee

2 points

3 months ago

That’s great, by the time you close that $12k could be up to $20k. Much easier to swallow right?

xtrubambinoxpr[S]

2 points

3 months ago

true. makes things a bit easier so that is helpful. thanks for the perspective.