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3 Ways Paying Off Debt Helped Us Buy Our First Home

By
Industry Observer

After spending years paying off over $130,000 of debt (thank you, student loans from expensive private universities), my husband and I were so excited to finally buy our first home. 

We'd been renting for over a decade, and our relatively low rent was a huge blessing while we were doing everything we could to lower expenses and increase our income to pay off our debt. While we loved our rental and its location, we knew we wouldn't live there forever.

Once we finally crossed the finish line of our epic goal, we were ready to have a place we could call our own.

During the process of buying our home, I realized we were reaping some pretty great (but kind of unexpected) benefits of the hard work we'd put in over the years of whittling away at our debt.

Today, I'm sharing three of the benefits we enjoyed while buying our first home without any existing debt.

It's important to note that I am not a financial advisor, and this information is not intended to be financial advice.  This is merely OUR story--but as always, consult a financial advisor if you need information specific to your situation.

1. We had a realistic picture of our finances.

I often hear stories of people who begin the process of getting approved for a mortgage for a home and then the harsh realization sets in that their expectations don't match their financial situation.

Fortunately, years and years of exercising our budget muscle in order to strategically kill off our debts provided us with a lot of insight into our financial situation.  Creating and sticking to a successful budget each month was a big part of that process.

We were well-aware of our income, what we could realistically afford, and that guided our home buying process.

2. Our income could stretch further.

We have a very average household income, but because we didn't have a lot of other debts, we were able to make the money we had stretch further. 

We still kept our monthly mortgage payment to a reasonable percentage of our income, but it gave us peace of mind to know that we wouldn't need to stress over making a bunch of payments each month.

3. We had great credit.

Honestly, we were a little surprised when our mortgage loan officer told us he'd never seen credit scores as high as ours. 

I don't pretend to be an expert in credit scoring, but apparently the fact that we'd paid off so much debt was a good thing. 

Yes, we had a solid down payment as well, and our only remaining open credit account was a credit card that was paid off each month and never carried a balance. 

Because of those financial decisions, we were able to get a really great interest rate on our loan, which will end up saving us thousands of dollars over the life of our mortgage.

The Big Picture

The truth is, when we were first getting started paying off our debt, we knew there would be some benefits.  There has to be some kind of motivating factor behind such a big undertaking, right? 

We knew we didn't want to be tied down by all of those payments.  We knew we wanted to have flexibility and free up some of our income for the things that mattered most to us.

What we didn't realize at the time was that the skills we were honing in the process would pay off in other ways as well.  Having our debt paid off gave us confidence that we were making a sound financial decision when buying our first house, which was priceless!

 

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