Re: Pay off car or buy house?
Ace,
Definitely pay of that 9% loan as soon as you can because paying off 9% debt on a wasting asset like a car is you best move now.
Also most of the housing stocks are starting to roll over after years of uptrend. This is a strong message that the latest housing boom is pausing-- and is probably over.
What this means to you is that prices are likely going to moderate and maybe drop-- hard. If you can figure out a way to get some temp-housing through the summer and fall and buy your house after September you will probably be in great shape to save some big money on the purchase price. That sets you up for a safe purchase and maybe even some immediate gains if teh selling gets overdone and you buy into it.
The time you have between now and then can be used to line up your financing and narrow your focus to specific neighborhood purchase targets. Time to get ready. Not time to purchase-- just yet.
The basic rule of thumb is that you can borrow 2.5X your documented income less any debt.
1. Pay off car
2. Line up financing
3. Buy late in 2006
Dont let your current lease expiration dictate your major financial moves. The lease expireation is a minor detail compared to the timing and sizing of a house purchase. Sketch out your strategy and then address the lease/current housing issues as a small detail to be managed.
Dont put the cart before the horse. Get some temp housing for the summer if need be. The main thing now is to time your housing purchase. There may be some real piling-on with selling this spring and if you hold you fire it may get overdone with the result being that you can purchase a nice home cheap from desparate/overextended sellers. Most sellers will ask too much in the spring while buyers will be very skeptical and demand a price-reduction risk-abating discount.
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