So I'm planning on having enough money for a small down payment and closing costs for a house next year. What's bothering me is that I'll still have a car loan and a student loan. It didn't bother me at first since both are at very reasonable interest rates and I plan to have a mortgage close to my current rent. My dad recently found out about my timeline and he seems worried that I won't be able to adequately maintain the house with both loans. However, if the mortgage is at my current rent level, that leaves 80% of the current rent/future mortgage for taxes and maintenance and such. I think that's a pretty good cushion.
The car loan would take a year to pay off but then I would have to start from scratch to save for the house. Of course, with no car loan it would only take about 6 months I guess to save. The student loan would consume all of my extra cash to wipe it out in like 5 or 7 years.
So for now I decided I need to get to the point where I have a dp & closing costs. If at that point I'm still bothered by the prospect of 3 loans, I can wipe out the car loan and work on a new dp. Or, with the new tax credit for first time homebuyers, if I magically find a house before the deadline, I could use the tax credit to pay off the car. Yes, I realize this is an interest-free 15 year loan.
My thoughts are, if I can find a house I can afford with a car payment and a student loan, that should leave room enough to start saving for a new car when this one's paid off. Did I mention my goal of buying the next car with cash? 10 or 12 years down the road, that is.. :) And if I buy a house without the car loan, I don't think I can restrain myself to the old price range. I think I'd be too tempted to extend the price range a bit. Then I'd be spending the same amount on debt service to cover a mortgage and SL versus a mortgage, SL, and car loan. Maybe I'm the only one that sees things this way and it's not a great way of thinking?
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