Hi!

110K Cash

Current loans

64k Car loan (worth about 60k) 3.2% interest - 6 years left (1050 payment per month)

24k car loan (work about 50k) 2.9% interest - 3 years left (540 payment per month)

I need to buy a home (probably within 6-12 months once either rates or house prices cool down). Living with family now.

Should I

A - Save the 110k (and try to have 20% down on a home)

B - Pay my loans off, and save up about 5% down from now until I buy a home?

C - Invest the 110k (Mutual funds) , and try to save up 5% down from now until I buy a home?

Thanks!

Comments

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Parking_Goal_3301 t1_iujaubx wrote on October 31, 2022 at 7:26 PM

That is a lot of money in cars. I would downgrade one or both of them if it was interfering with my ability to save 20% on a down payment.

cholley_doo2 t1_iujdf0k wrote on October 31, 2022 at 7:43 PM

i would sell those fkkrs

premaritalhandholder t1_iujf3el wrote on October 31, 2022 at 7:54 PM

That is quite alot of debt in the cars. I personally would downsize and use that money to pay off some of the loans.

What is your household income? What’s your price target for the house?

$110k is a good amount for a down payment, but can you afford an extra $2k - 3.5k monthly? Buying a house is pretty expensive and you’re already paying $1600/month on cars. Before factoring in food, necessities, repair costs (cars & house), taxes, etc, you’re looking at at least $3k per month. Make sure that you budget out everything and are sure that you can comfortably live with this extra expense.

If I was you, I would try to lower the monthly expenses before buying a house. While 3.2% and 2.9% isn’t bad, $1600/month on cars is alot. Out of all the options that you’ve given, without knowing specifics about monthly income & house price, I think B is the best option.

Just curious, what kind of cars do you have?

Baby_Hippos_Swimming t1_iujk3ej wrote on October 31, 2022 at 8:28 PM

Sell that $64K car, it is destroying you financially.

jasperjava t1_iujb5h8 wrote on October 31, 2022 at 7:28 PM

If you are using the money within 12 months it would be best to keep it in cash. We don’t have more details to go on regarding your debt to income ratio which will affect the planned home purchase, 88k on cars makes a big difference depending on income. Also would not bank on rates or prices declining significantly.

sonnyfab t1_iujap5b wrote on October 31, 2022 at 7:25 PM

I wouldn't rush to pay off such low interest rate debt.

TomBallsHard t1_iujaq1f wrote on October 31, 2022 at 7:25 PM

I'd go with saving the money and buying the home. Those interest rates on the cars are lower than you'll get on a mortgage. Investing in the market is good in the long run but volatile if you need to pull out within the next year so I'd avoid that especially with where the market is at right now.

Steve_Austin_OSI t1_iujcs6o wrote on October 31, 2022 at 7:39 PM

Buy a home as soon as you can.
RUle from my day:
Buy the most expensive house you can possible get, buy the cheapest car you can get away with. Buy a 64K car before owning a home is a mistake.One of those loses value, the other at least holdest if over time. ANd almost always gains.

reallyestateed t1_iujmpbt wrote on October 31, 2022 at 8:46 PM

Pay off the cars, your cash is losing value daily. Buy a house now, interest rates aren’t dropping significantly anytime soon, and if they do you can refinance.