Hi All,
Does this make sense to others or am I not considering something? Here's the story or skip down to the math. :)
I'm recently separated, 2 kids. Starting over from scratch after my ex ran up unbelievable debt, although we both have a very high income. I am buying a house in a few weeks, FHA, 3.5% down. I would rather put down more but timing isn't right and this house is. Even with PMI, it works out better than renting. Townhouse is condo ownership, everything inside is new, so no home maintenance issues upcoming.
I will have about 1500 left over each month, after mortgage, debt, spending, and retirement savings. Also bonuses along the way. "Mortgage" is the total P&I, PMI, insurance, condo fee.
Debt:
- 12k student loans at 2ish%. %200 per month
- 5k loan from 401k to get myself started out on my own. $40 per month
- mortgage PMI is $200 per month. B/c its FHA, PMI is the life of the loan.
- I carry none of the credit card debt he created.
- I have a small emergency savings.
- no car payment. I have a 2009 Prius that never needs more than routine maintenance. 150k miles, so maybe 3k for a battery if it goes kaput.
Thinking would be to invest b/c the long term returns are higher % than any of my debt %.
HOWEVER, if PMI is for the life of an FHA loan, then it makes sense to refi as soon as possible to get that off?
My conclusion (maybe?): I should sock everything into reaching 10-20% LTV to refi and get rid of PMI. THEN begin investing my extra money.