Just Because You Can Afford the Down Payment…Doesn’t Mean You Should Buy A House (Part II)
In my previous post, I wrote about a post on instagram where a real estate agent was saying that if you and your partner could saved $578 a week starting now then they could afford a down payment on a house by the end of the year.
While it is possible to do what the realtor said, I personally think that for most people that would be ill advised. I broke down the true costs in the previous post and decided to dedicate this one to ways that you could put those savings to better use!
How To Put That Money To Better Use
You’ve developed a great saving habit, saving yourself an extra $27,744 a year. That’s great! In a way, you’ve given yourselves a pretty good raise.
So if not to use it for a house, what should you use it for?
Pay Off Debt
First, if you have a credit score of 700 (remember, the OP’s minimum score was 620), that’s pretty good! You’re a little under the national average, but that’s still pretty good!
So why do you have a score of 700, rather than, say, 750, or even 800? There are a lot of reasons why your score might not be perfect, but the most likely reason might be that you have outstanding debt.
Also keep in mind, the worse your credit score is, the more it costs to borrow money. This comes in the form of interest rates. These rates can be applied to cars, college, and yes, homes.
One particularly predatory source of debt is credit card debt.
The true cost of credit debt isn’t just in the debt itself, but also interest and APR. It’s particularly manipulative because these credit card companies give the illusion that you only have to pay a minimum per month to manage your debt responsibly.
Why is it manipulative? Because it encourages you to NOT pay off a large amount (or all) of…