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1) When Does a software engineer start financial planning for retirement since the our Career span is only 15-20 years on average.
2) How much and which schemes to invest to mitigate the risk?
3) How much do we need for retirement?
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Rising Star
Chief
Rising Star
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Chief
If I were you, I would pay off that debt first, which shouldn’t take longer than 6-12 months with that income. Hell, you could probably do it inside of 6 months, if you really wanted to.
Rising Star
I think you will further stretch yourselves. The principal/equity you will build in this house with only 4% down will be a fraction of your monthly payment. Like others, I would focus on paying down all loans aggressively and then use the same amount to save for a down payment. Right now you can also get good deals on rentals incase you’re looking to upgrade for more space or get a modern concept home.
Chief
It's not per se, but you might be able to negotiate a better interest rate if you can become debt free before do it
I’d pay off the student loans and keep the car loan. Your credit score will likely be higher while you continue to make payments as long as the amount is not too high. My credit score dropped when I finished paying off my car loan. I’d also look into what kind of better interest rate you can get by putting more money down. You’ll also need savings left over after the down payment.
If you have good credit you don’t necessarily need an FHA loan. Speak to your lender. I put 5% down and still went with a conventional loan because as I understand it, PMI doesn’t drop off an FHA loan even when you reach 20% equity.
To answer your question, you could certainly manage it financially. I feel like I’m doing okay in a sorta similar/little more leveraged situation (solo, ~190k base, about $100k in remaining student loans, house price of $425k) and because I did my DD on short term improvements required and built it into my budget, I don’t feel stretched. I will say, I’m pretty frugal in the rest of my expenses so that helps maintain a balance between saving/investment and loan repayment. Was also very anal about making sure I didn’t get caught up in the hype of overvalued properties, was in a high appreciation potential location etc. to keep it a sensible financial decision.
Also, the non financial utility of living in a house really added up for me too, if that’s a consideration.
Gotcha. Your lender would be best able to advise on pros and cons of FHA and Conventional. I ended up putting only 5% down for the same reason
Folks are forgetting to mention that interest rates are likely to go up. So if you go with an FHA and decide to refinance later to remove the PMI, it might not be worth it with the higher interest rates. So you’ll be stuck with high PMI for a long time to come if you buy now and interest rates go up 6 months from now.
Pro
The inflation came. ^