Author Topic: Pay off student loans vs. save for home  (Read 1188 times)

diane.jsmith

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Pay off student loans vs. save for home
« on: Dec 23, 2010, 09:19:35 AM »
[font=&quot]Icurrently owe $16,000 in 2 different loans at low interest (3.12%).
I pay a total of ~$150 per month. I'm planning on purchasing a house in thefuture and am contemplating paying off the loans first or saving for the downpayment. I qualify for an FHA loan so I don't need a ton saved but still aconsiderable amount. I should have enough saved to pay off my loans in a fewmonths or I could have $16,000 saved towards a home downpayment.

It probably makes more sense to save the money for a downpayment since theinterest on the SL are so low. However, just knowing that those loans are outthere is annoying. This debt is the only fixed debt I have (no cc's, no carpayments etc...). Is peace of mind enough to pay off a loan before saving for ahome or what do you all think?[/font][/color]

James Falla

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Re: Pay off student loans vs. save for home
« Reply #1 on: Dec 23, 2010, 04:37:43 PM »
Hi there Diane
 
My advise is always to pay off any unsecured debt that you have first before saving for anything else. You are currently likely to earn less than 3.12% on any savings (after taking tax into account) so you are actually better off paying off the loans first and then putting all your energy into saving.
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