Tax Credit Loan Program
November 7th, 2008
Question: Repaying debt or buying house?
I am getting approx. $9000 sometime early next year. I am kind of stuck: should I use this money for a down payment on a house or pay off the remainder of my husbands student loan. With the Tax Credit Program currently running, we would be eligible for the $8000 tax credit, with which we eventually could pay off my husbands student loan. In the area we live, we could get a decent house for around $150 000 and we would qualify for an FHA loan. Also, in the area we live, the rent for a 2 bedroom apartment is about the same as a mortgage payment + taxes.
What would you advice?
It should be added that the interest on the student loan is 9%.
Answer: It is my understanding that “student loans” are the lowest interest loans available – I may be wrong, but since this loan is not in default or is costing a great deal of interest, it wouldn’t make much sense to pay it off. If you wish you can always add more money to the payment to pay it off sooner, but that’s your call. I think you should take the help the Government is offering with an 8,000 Tax rebate on a new home (if you qualify) You won’t get that kind of help for a dozen more years.
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