Poll

Should I pay off balance of student loan or put down 20% on a $100,000 condo?

Pay off student loan
0 (0%)
Purchase condo
0 (0%)
Other (please comment)
0 (0%)

Total Members Voted: 0

Voting closed: July 18, 2020, 04:13:20 PM

Author Topic: Pay off student loan or purchase new house/condo?  (Read 1653 times)

arana0908

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Pay off student loan or purchase new house/condo?
« on: July 03, 2020, 04:13:20 PM »
Hi!

Just wanted to get other people's thoughts on buying a house/condo vs paying off the rest of student loans.

I currently pay $1515 a month for a one-bedroom apartment in Tampa, FL, and have $22,000 of student loan debt (average 4% interest rate). I have saved up the money to either purchase a $100,000 condo here in Tampa (low cost of living) and put down 20% or I can pay off the student loan and be completely debt-free as it is the only debt I currently have. I plan on doing either of these things by the start of 2021 by which time I would have saved an additional $10,000 (3-4 months living expenses) so I would still have that as emergency savings regardless of which option I choose. A couple of different mortgage calculators estimate my monthly mortgage payment would be about $700-$900 (inc. taxes, insurance, HOA) depending on where I purchase and HOA fees.

I think being debt-free is what would put my mind at ease but I am not sure if it is necessarily the smartest decision financially.

Background:

Age: 25
Location: Tampa, FL
Annual Income: $86,000 (I have received about $30,000 in raises in the last 4 years at the same company and expect the trend to continue)
Monthly Expenses: $2900
Savings: $21,000
401k: $55,000
Schwab account: $1500 (sad I know)
Total Debt: $22,000

Current Net Worth: +$45,000 (using Personal Capital)

supportingmaps

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Re: Pay off student loan or purchase new house/condo?
« Reply #1 on: July 03, 2020, 09:30:15 PM »
What do you do for a living? If your company can outsource your job or automate it you might not want to make any big moves. We're in tumultuous times, will you be buying a condo in a safe neighborhood in Tampa?
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arana0908

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Re: Pay off student loan or purchase new house/condo?
« Reply #2 on: July 03, 2020, 10:15:41 PM »
I am a civil engineer/field superintendent at a large construction company that has been in business since 1884. I do not see my job being automated in the near future.

The neighborhoods we have been looking at are very safe and family-friendly. I do not know much about real estate honestly but Tampa appears to be one of the better real estate markets in the country from the research I have done.

I guess the other big thing to think about is due to the nature of the construction industry, relocations are a common occurrence. I will stay in Tampa a minimum of 3 more years at which point I figure it could be turned into a rental property if I do get relocated and with a low mortgage payment should be able to save up for a down payment on another property in 3-4 years.

Irish247

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Re: Pay off student loan or purchase new house/condo?
« Reply #3 on: July 15, 2020, 09:06:06 AM »
Likely depends on your position in the company but most GCs help with relocation. Some pay closing cost for sales, in the event you want to sell or buy the current place. You also have the option to travel for work as well. Your company would likely pay for living cost, or at least offset with a COLA. So, you could keep your condo and travel for work.  Tampa is pretty easy for turnover, so I don't think you are in a bad spot to purchase. The student loan aspect is annoying but at only $22k to go, you aren't that far from getting it knocked out anyway. I would say go ahead and buy the property. Ideally, there will be some equity with it from the start, which will help later. You can always rent it out later on as well, which you can't do with a student loan. So, buying gives you another potential revenue stream.

You made mention of average of student loans rate is 4%. Do you have any in there that are much higher? Have you looked at a consolidation loan for a lower rate? I'm not up to speed on student loan rates, but 4% doesn't sound all that bad. If you did have a portion that is at a higher rate, maybe just pay those off and only carry the smaller interate rate loans.

As a Super you likely won't be at $86k for long, depending on the type of GC you work for. If you are with one of the larger companies as you say, you'll hit $100k in the next year, and likely get to at least $150k even without any major skill over time.  You will also likely get project bonuses along the way too, so any of those windfalls could knock out the loan at a later date as well.

I would also imagine that the mortgage rate you would have on the condo will be cheaper than your current rent plus utilities, etc.. So you could always use the delta to add more to paying down the student loan since you are use to paying the $1515 anyway.  Your post shows a guess of $900, so that could leave something close to $600/month extra to pay down student loans. Of course with a home you have to include insurance, taxes, utilities, etc.

Anyway, I say go for it. Owning is always better than renting. Owning gives you the option to rent it out later, sell it, leverage it, even potential for airbnb or similar short term rentals, especially since you are in Tampa.

Also as far as the next property, don't forget you can use the equity of the first to buy another as well. So buying the condo is also a forced savings plan in a way.

Good luck.

Harshv

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Re: Pay off student loan or purchase new house/condo?
« Reply #4 on: July 20, 2020, 07:58:50 AM »
Having student loans doesn’t necessarily put the kibosh on buying a home.

There’s no clear-cut right or wrong answer. There are strong arguments for buying a home right now, as well as equally solid arguments in favor of waiting. Base your decision on whether to pay off student loans or buy a house on your finances, priorities and goals

titlewealth

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Re: Pay off student loan or purchase new house/condo?
« Reply #5 on: August 13, 2020, 07:29:10 AM »
I have been out of the student loans for a while now so have not been keeping up with the news but have you researched what the current stimulus is on student loans?
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supportingmaps

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Re: Pay off student loan or purchase new house/condo?
« Reply #6 on: October 15, 2020, 04:00:22 PM »
I have been out of the student loans for a while now so have not been keeping up with the news but have you researched what the current stimulus is on student loans?

Take this with a grain of salt as my memory is a bit hazy and there might be fine print I didn't consider. If I'm not mistaken interest on student loans have been suspended. I am revisiting this thread because I have a chance to pay off all my student loans.

It's kind of an oxymoron but even in this crazy timeline I can find a way to take advantage of this situation.
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