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Another one: buying a house

Submitted by Jon Morrow on October 27, 2007 - 17:23.

Philip,

Outstanding article. That's some thorough writing (and thinking)!

One other time when you should pay down debt instead of investing in your 401(k) is if you're thinking of buying a house. Lenders look carefully at your debt to income ratio, and it affects both your interest rate and the amount you can borrow.

If you're thinking about buying a house in the future, it might (temporarily) be a smart idea to start paying down any high interest debt or debt with high utilization ratios. You'll increase your credit score, improve your debt to income ratio, and potentially save yourself a lot of money over the long-term with a better interest rate.

Thanks for the article!

Jon

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