Pay student loans early or save f oi r house?

[caresirs]

Scenario:
Graduated from university with 30,000$ school loans. Have been paying them off at an advanced rate, now has 11,000$ left. Required payment is $135/month. Have simultaneously saved 6000$. Student loan rate is 4%.

Graduate: Wants to pay off loan as quickly as possible, wants to apply savings to loan. Then start saving for a home/condo/etc. Open to paying off loan quickly, but not quickly as possible, and saving simultaneously (as has been doing) – but still paying at least 600/month and maybe taking 2000 now and applying to student loans.

Graduate parent: thinks graduate should stop paying loan off early, as payment would not inhibit mortgage procurement. Thinks graduate should save for investment (home, condo, rental, stock, whatever…) instead of paying off loan early.

Both aware of recession possibilities (maybe savings could be used to buy a home at a bargain if recession occurred; maybe could lose shirt in stock investments).

Advice wanted! (Including other possible options.)

 

[rjg21]

@caresirs While gathering lots of advice and counsel is wise, let’s keep in mind that Graduate Parent doesn’t have a say in this. Graduate, being a full adult, doesn’t need to justify their decisions to Graduate Parent anymore. It can be a hard adjustment, for sure, but Graduate Parent (and Graduate, for that matter) needs to recognize that they are no longer “raising” up Graduate Child. That stage of life is over now. Graduate is no longer a child and must make their own way in the world, make their own life decisions, whether those decision align with Graduate Parent’s preferences or not. And I say this with much love (and tough love).

So Graduate: I agree with you, and would recommend paying off the student loans first. It will affect how much loan you will qualify for, and will impact how crunched and risky your finances will be if you instead bought now. Besides, it appears you’re paying the student loans off at a pretty good clip, so we’re not talking about a massive 10 year delay or something, right? So pay them off, get them out of your life, and make the home buying process (on your schedule) a LOT more comfortable. That’s ultimately what good personal finance is about, making the life choices that enable you to live the life you want.

 

[resjudicata]

@caresirs Graduate parent needs accurate info to make recommendation: A mortgage company/bank will assuredly look at your debt in determining both the amount you can carry and your overall risk.

Always better to pay off debt, period, but especially when you're thinking of taking on more.