Q: My husband and I sold our house last year and were able to pay off all of our outstanding debt. We live in an apartment now and currently live solely off of his income. We save my entire salary currently, but we are looking into buying another house. My question involves staying in the apartment to save more or go ahead and buy a house. Would it make more sense to continue to save to have a bigger down payment on a house, so we can pay it off? We are trying to save money in order to become financially independent, but I am not sure we are doing everything we should in terms of investments either.
A: A few things to consider in making this decision:
1. Interest rates are still at record lows
2. Home prices are steadily rising
Not to mention there are substantial tax benefits associated with mortgage interest.
I understand that you and your husband are saving to have a bigger down payment but in the long run it may make more sense to buy your retirement castle now at a lower interest rate and accelerate your payments to pay off your house faster. Meaning if you sign up for a 30 year fixed loan at 3.5% and your monthly payment is $2,500 a month, you can always pay $5,000 per month and pay off your principal faster at no penalty.
We do offer a free one hour consultation. If you would like, I can certainly offer better advice if I have a better understanding of your financial situation.
Please feel free to reach out to me and we can schedule a time to meet that is convenient for both you and your husband.