vania-janet/multiturn-rag-retrieval-data huggingface dataset:
That is a decision you need to make, but some of the pros and cons you could consider to help your decision making include: Pros: If bought at the right time in the property cycle and in a good growth area, it can help you grow your net worth much quicker than having money in the bank earning near zero interest. You would be replacing rent payments with mortgage payments and if your mortage payments are less than your current rent you will have additional money to pay for any expenses on the property and have a similar cashflow as you do now. You will be able to deduct your interest payments on the mortgage against your income if you are in the USA, thus reducing the tax you pay. You will have the security of your own house and not have to worry about moving if the landlord wants you out after your lease expires. Cons: If bought in a bad area and at the top of the property cycle you may never make any capital gains on the property and in fact may lose money on it long term. If the mortgage payments are more than your current rent you may be paying more especially at the start of your mortgage. If you buy a house you are generally stuck in one spot, it will be harder to move to different areas or states as it can cost a lot of money and time to sell and buy elsewhere, if renting you can generally just give notice and find a new place to rent. Property maintenance costs and taxes could be a drain on your finances, especially if the mortgage repayments are more than your current rent. If your mortgage payments and property expenses are way more than your current rent, it may reduce what you could be investing in other areas to help increase your net worth.
This probably isn't worthy of being more than a comment, is not specific to your needs (other answers cover that better), and I am a big advocate of NOT owning property but investing the money in the markets instead (potentially higher rates of return), however, if I were going to buy a property I would do so sooner rather than later as a rise in interest rates is not a matter of if but when. Borrow now when it is cheaper to do so and lock in the rate by taking out a fixed rate mortgage - the rate might be higher than variable rate mortgages but their rates will go up above your fixed rate very quickly.
There's probably no simple answer, but it's fair to say there are bad times to buy, and better times.  If you look at a house and see the rent is more than the mortgage payment, it may be time to consider buying.  Right now, the market is depressed, if you buy and plan to stay put, not caring if it drops from here because you plan to be there for the long term, you may find a great deal to be had. Over the long term, housing matches inflation.  Sounds crazy, but. Even into the bubble, if you looked at housing in terms of mortgage payment at the prevailing 30yr fixed rate and converted the payment to hours needed to work to make the payment, the 2005 bubble never was. Not at the median, anyway. At today's <5% rate, the mortgage will cost you 3.75% after taxes. And assuming a 3% long term inflation rate, less than 1%. You have expenses, to be sure, property tax, maintenance, etc, but if you fix the mortgage, inflation will eat away at it, and ultimately it's over. At retirement, I'll take a paid for house over rising rents any day.
At the area where I live (Finland), banks typically charge a lot more for additional mortgage credit taken after purchasing the house. So, if you are planning to purchase a house, and pay it with a mortgage, you get a very good rate, but if you pay back the mortgage and then realize you need additional credit, you get a much worse rate. So, if this is applicable to your area as well, I would simply buy stocks after you have paid enough of the mortgage that it is only 50% of the house price or so. This is especially good advice if you are young. Also, if your mortgage is a fixed rate and not an adjustable rate mortgage, you probably have a very low permanent interest rate on it as interest rates are low currently (adjustable rate mortgages will also have a low rate but it will surely go up). Some people say there's a bubble currently in the stock market, but actually the bubble is in the bond market. Stocks are expensive because the other alternatives (bonds) are expensive as well. Paying back your mortgage is equivalent to investing money in bonds. I don't invest in bonds at the current ridiculously low interest rates; I merely invest in stocks and have a small cash reserve that will become even smaller as I discover new investment opportunities. I could pay back a significant percentage (about 50%) of the loans I have by selling my stocks and using my cash reserves. I don't do that; I invest in stocks instead, and am planning to increase my exposure to the stock market at a healthy pace. Also, consider the fact that mortgage is cheap credit. If you need additional credit for consumption due to e.g. becoming suddenly unemployed, you will get it only at very expensive rates, if at all. If you're very near the retirement age (I'm not), this advice may not be applicable to you. Edit: and oh, if your mortgage is fixed rate, and interest rates have come down, the bank will require you to pay the opportunity cost of the unpaid interests. So, you may need to pay more than you owe the bank. Edit2: let's assume the bank offered you a 4% fixed rate for a 10-year loan, which you agreed to.
Talk to your parents, and find out if you are reducing the debt or not.  Find buyers, sell the place now and get out the deal.  Of course you will have to wait to get a good price on it.  Short term you haven't lost that much, but long term you will. Take your 25%, and use it as a down payment on a regular bank mortgage.  Lesson learned move on.
If you're planning to walk away from the house - don't invest any more money in it. Just be aware of the consequences. It may be worth considering a short sale if both the lenders will agree to erase the debt. If you're going to keep the house, then the fact that you're underwater now is irrelevant, and you should do your best to reduce the burden by paying off the higher rate loan. But, I personally think that accumulating enough cash to make you comfortable in case of a job loss for several months is a higher priority.
"Buying now with a mortgage gets you: Waiting to buy with all cash gets you: These are also some of the pros or cons for the rent or buy dilemma that Paul mentioned in comments to the OP. This is a very complex, multi-faceted question, that would not respond well to being put into any equation or financial model. Most people answer the question with ""buy the home now with a mortgage"" if they can pay for the down payment. This is why the mortgage industry exists. The people who would want to finance now rather than buy with all cash later would not only be analyzing the question in terms of financial health but also in terms of general well being. They might consider the tremendous pride that comes with home ownership and living under a roof of one's own. Who can say that those people are wrong?"
Easy answer -- pay down your debt.  Why easy? Because you can't afford the house. The other posters mentioned it; I'll tackle it too: Your $1445/month mortgage payment estimation is just that - mortgage only. Why haven't you  included home insurance or taxes? According to that last graphic, those are $1930 and $1910 per year. That adds $320 to your monthly cost. $1445 + $320 = $1765/month. More than what you're paying in rent, and you say you have little enough left over after that.  And that's not counting CMHC insurance like Chris W. Rea mentioned, or maintenance, which is something renters always underestimate. I know I did.  And don't even get me started on the fact that the (currently super low) interest rate is fixed for only 5 years.  I know you really, really want to buy a house, and you really want to stay in that expensive area you live in. And you're trying hard to make the numbers work. But the fact is, you're setting yourself up for bankruptcy.  Realistically, you have these options: 1) stay in the area, forget buying for the foreseeable future, continue renting, pay down debt and then save for a proper down payment 2) stay in the area, but make a smaller, cheaper place work 3) move to a cheaper location 4) figure out how to make more money.  That's it. Sorry to be blunt; this is the reality.
If you can get a rate of savings that is higher than your debt, you save.  If you can't then you pay off your debt.  That makes the most of the money you have. Also to think about:  what are you goals?  Do you want to own a home, start a family, further your education, move to a new town?  All of these you would need to save up for.  If you can do these large transactions in cash you will be better off. If it were me I would do what I think is a parroting of Dave Ramsay's advice Congratulations by the way.  It isn't easy to do what you have accomplished and you will lead a simpler life if you don't have to worry about money everyday.
The only real consideration I would give to paying off the debt as slowly as possible is if inflation were much higher than it is now.  If you had a nice medium to low interest (fixed rate) loan, like yours, and then inflation spiked to 7-8%, for example, then you're better off not paying it now because it's effectively making you money (and then when inflation calms back down, you pay it off with your gains). However, with a fairly successful and active Federal Reserve being careful to avoid inflation spikes, it seems unlikely that will occur during your time owing this debt - and certainly isn't anywhere near that point now.  Make sure you're saving some money not for the return but for the safety net (put it in something very safe), and otherwise pay off your debt.
"This is a comment, not an answer. -- but it needs saying and doesn't fit in the comment boxes. Owning is not always cheaper than renting.  Houses don't always appreciate, and in the early years of a loan you're mostly paying interest. -- so that too is ""lost money "". The time to buy a house is when you are reasonably sure you aren't going to move in the next five years or so, you need something a rental can't give you, you have at least 20% to put down so you avoid the pmi rip-off, you've run a full budget including upkeep and insurance costs and are sure you can carry the house worst-case ... including if you're out of work for an extended time...  (I've seen people lose a job and discover that they can't keep the house,  and can't unload it quickly.  Good route toward bankruptcy. Houses are not a liquid asset, and being ""house-rich, cash-poor"" is potentially dangerous. ) If you really hate apartments,  remember that sometimes you can rent houses too, often at lower cost per square foot. Basically, don't be stampeded into buying. I rented for two decades before I bought. And by/while doing so I was able to put aside enough investments that I could have bought a half-million-dollar house for cash, and was able to change cities several times without the stress of having to sell and re-buy. I missed out on the insane housing bubble,  but I also avoided being hit when that crashed."
"Forget, for the moment, which will pay off most over the long term. Consider risk exposure. You've said that you (hypothetically) have ""little or no money"": that's the deal-breaker. From a risk-management perspective, your investment portfolio would be better off diversified than with 90% of your assets in a house. Consider also the nature of the risk which owning a house exposes you to: Housing prices are generally tied to the state of the economy. If the local economy crashes, not only could you lose your job, but you could lose a good part of the value of your house... and still owe a lot on your loan. (You also might not be able to move as easily if you found a new job somewhere else.) You should almost certainly rent until you're more financially stable and could afford to pay the new mortgage for a year (or more) if you suddenly lost your job. Then you can worry more about maximizing your investments' rate of return."
"Although there is no single best answer to your situation, several other people have already suggest it in some form: always pay off your highest after-tax (!) interest loan first! That being said, you probably also have heard about the differentiation for good debt vs. bad debt. Good debt is considered a mortgage for buying your primary home or, as is the case here, debt for education. As far as I am concerned, those are pretty much the only two types of debt I'd ever tolerate. (There may be exceptions for health/medical reasons.) Everything else is consumer debt and my personal rule is, don't buy it if you don't have the money for it! Meaning, don't take on consumer debt. One other thing you may consider before accelerating paying off your student debt, the interest paid on it may be tax deductible. So you should look at what the true interest is on your student loan after taxes. If it is in the (very) low single digits, meaning between 1-3%, you may consider using the extra money towards an automatic investment plan into an ETF index fund. But that would be a question you should discuss with your tax accountant or financial adviser. It is also critical in that case that you don't view the money invested as ""found"" money later on, unless you have paid off all your debt. (This part is the most difficult for most people so be very cautious and conscious if you decide to go this route!) At any rate, congratulations on making so much progress paying off your debt! Keep it going."
The bit I don't quite understand is why you are thinking about staying in debt in the first place - you're basically thinking about shuffling around assets and liabilities in order to stay in debt? I think what I would do in your situation is to liquidate enough of the investments you have and pay off the mortgage. This doesn't change your net worth position less the fees etc that you might incur, but it'll save you the interest for the mortgage over the remaining term of your mortgage.
Sounds fishy - taking out more debt to pay the main mortgage down faster? There are a couple of issues I can see: I would think that a much more sensible strategy with a lot less risk is to save up extra cash and send your lender a check every quarter or six months.
The crucial question not addressed by other answers is your ability to repay the debt.   Borrowing is always about leverage, and leverage is always about risk.  In the home improvement loan case, default comes with dire consequences-- to extinguish the debt you might have to sell your home. With a stable job, reliable income, and sufficient cash flow (and, of course, comfort that the project will yield benefits you're happy to pay for), then the clear answer is, go ahead and borrow. But if you work in a highly cyclical industry, have very little cash saved, or for whatever other reason are uncertain about your future ability to pay, then don't borrow.  Save until you are more comfortable you can handle the loan.  That doesn't necessarily mean save ALL the money; just save enough that you are highly confident in your ability to pay whatever you borrow.
Does this plan make sense mathematically? - No not really.  The housing market can be fairly volatile (depending on your location), and it is really a good market for buying right now.  You're going to make 1 or 2% on your money over the next year and risk paying 10% more for the house (or more).  Even if you had a loan at 5% - that would be 5% of what you still owe, not the full value of the house. Does it make sense in terms of the common rules about paying a mortgage off early? - Yes, though make sure you have at least 80% of the house value so you don't get nailed with PMI (which may have a fixed duration). Is there a better strategy that I am overlooking? - Yes, investigate buying a house now.  I'm not saying rush into it - shop around and find a really good deal.  Get a 15-year mortgage (or less) and put what you're able to down (maybe 80% down).  You can then payoff the mortgage over the next year or two and not have the risk of the volatility of the market raising the prices on houses and you getting less for your money.
There may be specific answers that can be determined based on the interest rates, amounts, tax provisions, etc. But I'm here to tell you... It is much easier (i.e., less stressful) to own a home when you have less debt. Pay off any and every debt you can before purchasing a home because there will always be something requiring you to spend money once you own one.
What kind of financial analysis would make you comfortable about this decision? The HELOC and ARM are the biggest red flags to me in your current situation. While I don't expect interest rates to skyrocket in the near future, they introduce an interest rate risk that is easy to get rid of. Getting rid of the HELOC and converting to a fixed mortgage would be my first priority. If you also want to upgrade to a new home at the same time (meaning buy a new home contingent on the sale of your first, paying off the HELOC and mortgage), that's fine, but make sure that you can comfortably afford the payment on a fixed-rate mortgage with at least 20% down. I would not take additional cash out of your equity just to save it. You're going to pay more in interest that you're going to get in savings. From there things get trickier. While many people would keep the first property on a mortgage and rent it out, I am not willing to be a landlord for a part-time job, especially when the interest on the mortgage gouges my return on the rent. PLus leverage increases the risks as well - all it takes is to go one or two months without rent and you can find yourself unable to make a mortgage payment, wrecking your credit and possibly risking foreclosure. So my options in order of precedence would be: At what point does it make sense to become a landlord? The complicated answer is when the benefits (rent, appreciation) relative to the costs (maintenance, interest, taxes, etc.) and risks (lost rent, bad renters, home value variance) give you a better return that you could find in investments of similar risk. The simple answer is when you can pay cash for it. That takes interest and lost rent out of the equation. Again, some are willing to take those risks and pay 20% down on rental property. Some are able to make it work. Some of those go broke or lose their properties.
What does your cash flow look like? If you can comfortably afford to pay the extra cost and ride out the mortgage, it can be a nice investment. Better if you can manage the property yourself and are somewhat handy. Realize you should be able to raise rents over time so that it is cash flow even eventually.    If cash flow is tight, sell it and re-fi your current place
Common investment advice recommends paying off all debt before you invest.  This is certainly not debated when the debt is credit card debt or other high interest debt.  Some would argue this doesn't necessarily apply to school debt or mortgage debt, however its not clear what to suggest.  Since any investment you make is unknown whether you will win or lose money, and every debt you have is guaranteed to be a loss via interest, its almost always a good idea to pay off all of your debt first.
So if I understand your plan right, this will be your situation after the house is bought: Total Debt: 645,000 Here's what I would do: Wait until your house sells before buying a new one.  That way you can take the equity from that sale and apply it towards the down payment rather than taking a loan on your retirement account.   If something happens and your house doesn't sell for as mush as you think it will, you'll lose out on the gains from the amount you borrow, which will more than offset the interest you are paying yourself. AT WORST, pay off the 401(k) loan the instant your sale closes. Take as much of the remaining equity as you can and start paying down student loans.  There are several reasons why they are a higher priority than a mortgage - some are mathematical, some are not. Should I look to pay off student loans sooner (even if I refi at a lower rate of 3.5% or so), or the mortgage earlier ...   My thoughts are that the student loans follow me for life, but I can always sell and buy another home So you want this baggage for the rest of your life?  How liberating will it be when you get that off your back?  How much investing are you missing out on because of student loan payments?  What happens if you get lose your license?  What if you become disabled?  Student loans are not bankruptable, but you can always sell the asset behind a mortgage or car loan.  They are worse than credit card debt in that sense.  You have no tangible asset behind it and no option for forgiveness (unless you decide to practice in a high-need area, but I don't get the sense that that's your path). The difference in interest is generally only a few payment' worth over 15 years. Is the interest amortized the same as a 15 year if I pay a 30 year mortgage in 15 years?  Yes, however the temptation to just pay it off over 30 years is still there.  How often will you decide that a bigger car payment, or a vacation, or something else is more important?  With a 15-year note you lock in a plan and stick to it. Some other options:
This is a very personal situation of course, but if you can afford the repayments then I recommend keeping the house!. A house is a long term investment and one has to live somewhere. You probably didn't buy the house planning to sell it in 5 years so while in the short term you could suffer a loss on paper chances are things will pick up, they have to eventually. For each boom there is a bust, one for one.
"So you're making $150,000 per year and you have $245,000 in debts. You're in your late 30s and have $41,000, or less than 1/3 of a year's pay, put away for retirement. That's a bad situation, but not disastrous. Lots of people have recovered from far worse. But like the old joke goes, when you realize that you're deep in a hole, STOP DIGGING. The worst thing you could do right now is liquidate the few assets you have and go deeper into debt. I don't know where you live or what the housing market is there. But the easy answer is: find a cheaper house.  I'm not sure what you mean about ""affect the resale value"". Yes, if you buy a cheaper house it will have a lower resale value. So what? The days when a house was an investment that would skyrocket in value are over. (And even in those days, it didn't help most people. So when you move, you get a big profit on the sale of your house. But the house you're moving to probably went up by a similar percentage, so you really didn't gain anything.) Even if your house did increase in value, unless you sell it, that doesn't help you make the mortgage payments. It's a paper profit. Get yourself out of debt. Step 1 is to stop taking on new debts. And if at all possible, you should be putting bare minimum 6% into your retirement plan. I don't know where you work, but most employers match some percentage of the first 6% you put in. If you don't take advantage of that, you're giving up free money."