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I don't know the specifics of your student loan, but I would hoard the cash. Definitely keep paying your loan payments as they are due, but I think it would be better to have the cash on hand than to pay more than you need to on the student loans.
I had enough to put down 20% on my mortgage but I went with 3.5% instead. The rest of the cash I had saved up got wiped out pretty fast after moving in and getting settled. I was happy I had kept the cash.
The formula lenders use typically does not penalize those with modest student loans; when examining one's finances in preparation for buying a house it is smart to understand what criteria is important to lenders. Boosting your savings is preferred. Don't confuse "credit card debts" with other kinds of debt -- Will student loan debt impact a mortgage application? - loans.org
My vote is to save as much as you can. I'm not familiar with the NACA loan program - do they require PMI when putting zero down?
As someone who used a zero down loan program when we purchased our home, my advice is:
1.) Make sure you're going to live in that home long enough to build significant equity. Probably 10+ years.
Significant meaning that after paying all the fees and costs associated with selling, you walk away with money in your pocket for your next home.
2.) As soon as you reach that 20% loan-to-value ratio, refinance to drop the PMI (if you're required to have that).
3.) This is market/area specific but (IMO) you should only go with zero down if your market is stable or better yet home values appreciate.
Zero down programs can be incredibly helpful (it was for us) or they can bite you in the butt.
Im planning on purchasing a home with in two years. currently im saving and working on paying off student loan debt. What is more important to have a nice amount of money saved or to have no debt? Now im putting equal amounts of money in saving and on my student loan. i owe 26,000 in student loan and i have a lease payment that will be paid off by the time im ready to purchase a home and no other debt. should i continue to put the same in saving and on student loan or should i change the % for each?
Pay off debt first, then pay off mortgage early while buying low cost stock ETFs and you'll be doing better than 99% of the population.
Im planning on purchasing a home with in two years. currently im saving and working on paying off student loan debt. What is more important to have a nice amount of money saved or to have no debt? Now im putting equal amounts of money in saving and on my student loan. i owe 26,000 in student loan and i have a lease payment that will be paid off by the time im ready to purchase a home and no other debt. should i continue to put the same in saving and on student loan or should i change the % for each?
Keep doing that. Savings and debt repayment are equally important.
I know this ventures off topic, but this is ridiculous. The 10% down part. You may have gotten lucky with this sale, being able to choose, but it is typically a pretty ignorant stipulation. You only have to get to closing. It isn't your business what the buyer's financials are like, other that they can close the loan. Plenty of people purchase with low down payments to keep the cash on hand for other things.
*******s. The seller has every right to do that, and it's not unethical either. Understand, your acceptable parameters above are just as nuanced as theirs.
*******s. The seller has every right to do that, and it's not unethical either. Understand, your acceptable parameters above are just as nuanced as theirs.
They have every right, but that doesn't make it a smart financial decision. It may have worked once, but overall, it is a pretty bad rule to go by.... At least if you are after maximizing your profit.
I was in a similar situation. I will tell you that we were in a hot Boston real estate market and prioritizing paying off our student loans and waiting two years before we had a downpayment saved and loans paid off cost us hundreds of thousands of dollars. Entering the market later meant a.) houses were more expensive and we could afford much less house than we could have when we started saving and b.) we had significantly less appreciation and equity when we went to sell than many of our peers did. YMMV because of your housing market. So we ended up paying almost double for the same house than if we had gone 0% down immediately and paid the student loans and mortgage at the same time.
Im planning on purchasing a home with in two years. currently im saving and working on paying off student loan debt. What is more important to have a nice amount of money saved or to have no debt? Now im putting equal amounts of money in saving and on my student loan. i owe 26,000 in student loan and i have a lease payment that will be paid off by the time im ready to purchase a home and no other debt. should i continue to put the same in saving and on student loan or should i change the % for each?
Pay off your debt. Budget a emergency/cash fund and pound the debt, Now you owe nothing and you aren't paying anyone any interest. Start saving/investing. Now the bank is paying you interest.
They have every right, but that doesn't make it a smart financial decision. It may have worked once, but overall, it is a pretty bad rule to go by.... At least if you are after maximizing your profit.
Jay it depends on your reasons for selling. If you need a fast sale you go for the least contingencies possible. And having so little cash says to me they'll nitpick every item on the inspection which is a game I wasn't going to play. That said if it was my ONLY offer I would have taken it but if you're competing with multiple then why would you? Unless they come in 10k or more over list. The bank is going to be more stringent with inspection and if you're in a high demand area that could mean they come back below what the original offer. If a buyer doesn't have enough cash to put down they likely won't have enough to bridge the gap there either. It's just riskier all around.
And definitely never buy a house if you don't have a hefty emergency fund. I hope you weren't advising that because things break and they can't always wait for you to save enough to fix it.
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