Savings vs bills

CowgirlK39 · July 2014

I struggle with this so bad. DH and I have saved $4500 to put towards closing costs when we buy a home. We have been looking and looking but have yet to find what we want. We were planning to try for a sellers concession when we find the right one, but our savings has just kept growing while we look.

We have a loan that is under 3k right now that I am considering just paying off. That would be 75-115 dollars a month back in our pocket. If we were planning on doing a concession anyway, should we just pay off the debt while we are still house hunting?

Mom987 · July 2014

By concession do you mean "seller pays closing costs?" That's what we did and it seems pretty common. I'd probably pay off the $3k and keep the $1,500+ keep saving

jtmh2012 · July 2014

Just because you're planning on it and it is common doesn't mean you'll get it. Or in our case, the only way the seller was paying closing costs was if we raised the sales price (thus really just financing the closing costs across 20 yrs).

Xstatic3333 · July 2014

I'd keep the money until you've closed on the home (for closing costs or incidental/unexpected expenses). We did get a closing credit for our home, but they're rare in my area because it is a strong seller's market. Most homes go right away for at or above asking; ours just has some "unique" decorating touches that make it not for everybody.

SmrBrd2012 · July 2014

I also vote for keeping the money. Having a a much as possible while buying a home is a good strategy. You never know what expenses will pop up. And depending on the market in your area, sellers paying closing costs might not be common. I'm pretty sure one of the reasons our offer was accepted in a multi bid best and final offer situation is because we said we would pay our own closing costs.

hoffse · July 2014

I wouldn't pay it off until you've been through the closing process and you see what you have left after the dust settles. Our sellers are paying ours, but we were only able to negotiate that after the inspection.

You don't want to lose out on a house you love simply because you don't have the closing costs ready to go.

Sisugal · July 2014

I would not plan on seller paying anything toward closing costs. The housing market has changed and is improving in many parts of the country. Seller assist is very rare in my area right now.

For now, I would consider splitting the amount you are saving 1/2 to new house and 1/2 to debt pay off.
Make sure you have a good 6 month's expenses saved that will still be in your bank AFTER closing - along with moving costs, start up costs, repairs/renovations/ decorating/furniture and the assorted outdoor and tools etc that comes with setting up a house/home.

Don't jump into home ownership until you are financially prepared.

jlaOK · July 2014

I wouldn't pay off the loan now. Buying a house with little savings is scary and I wouldn't risk it. Do you have any other emergency fund savings? I'd cut back on all non-essentials to try and pay off the loan and/or maximize savings until you get into a house.

formerlyGDaisy09 · July 2014

How much interest are you paying on the loan, how much are you paying towards it right now?

strickland8052 · July 2014

What is the interest rate on the loan? If above 5%, I'd pay off the loan. If under, I'd hold on to the money for unexpected expenses that might come along with moving.

brij2006 · July 2014

I would pay off the loan in full to be debt free before buying a home.

Also going to ditto @sisugal Be sure to have a 6 months emergency fund, be 100% debt free, and have your moving/start-up costs saved before purchasing a home. Otherwise you're just asking for Murphy to move into the spare bedroom and mess up your "plans."

smbenevides1989 · July 2014

I agree with others. Pay off the debt first before moving into a home. This way you can save up that extra $100 a month for your closing costs/moving fees, etc.

jtmh2012 · July 2014

brij2006 said:

Also going to ditto @sisugal Be sure to have a 6 months emergency fund, be 100% debt free, and have your moving/start-up costs saved before purchasing a home. Otherwise you're just asking for Murphy to move into the spare bedroom and mess up your "plans."

Definitely this.....we moved in at the end of January. The upstairs A/C unit just died on us and even with a home warranty, it is costing us $300-400 to get it fixed.

Fortunately, we have extra cash on hand.

CowgirlK39 · July 2014

There are actually two loans I could pay off. One student loan which I believe is under 3% interest and the other is a store credit card that we had to take out because we needed a lawn mower. It was supposed to be no interest if you made all payments on time but of course, I had a crazy month last month and was late on the payment. That one is definitely over 5% now. I'm so mad at myself for letting that happen but it is what it is.

Xstatic3333 · July 2014

CowgirlK39 said:
There are actually two loans I could pay off. One student loan which I believe is under 3% interest and the other is a store credit card that we had to take out because we needed a lawn mower. It was supposed to be no interest if you made all payments on time but of course, I had a crazy month last month and was late on the payment. That one is definitely over 5% now. I'm so mad at myself for letting that happen but it is what it is.

Hmmm, in that case I might pay off the store card. I know opinions about debt vary on this board. Some of us want no debt before buying a home, while others (like us) are buying while we still have SLs or other very low-interest debt. I definitely think that I'd want to be free of any CC debt before buying, though. It's a judgement call-I definitely think that how much you have saved overall is also a factor. I assume you have a good e-fund and DP in place, but if not you'll need those things soon so quickly getting rid of the lawn mower debt might help you save more quicker.

CuriousKiddosMama · July 2014

It depends upon where you are and how hot the market is. For us we actually have 2 offers on our house right now. One wants closing costs, and the other doesn't. Just because of that we will probably go with the other one if he comes up just a little bit more. Save your closing costs if you are still looking for the right house- because you may find it and then lose it by asking for all the closing costs. Since you have built that up though to what you think you need, maybe start using the money you were saving for that every month to help pay off this bill quicker.

Savings vs bills

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