Should I save for downpayment for a house or invest in retirement?

I am wondering, what should I do? I heard the more down payment I put down to a house, the more I save on interest. But retirement is very important too. What should I do? if I only have a small amount of money each month to save.

Public Comments

1. Get a house and pay it off as fast as you can. Can you imagine being retired on a fixed income and having to pay rent that increases every year? If you retire owning a house and with having no debts, you can be insulated from financial difficulties.
2. I'm 17 years away from retirement and decided my retirement money wasn't enough. I bought property and the initial investment has risen $65,000 in just over 2 years. I suggest get your property 1st then when it's paid off, put away for retirement. You can allways sel it and use the money to live comfortabely.
3. It depends how old you are. If you are older than 40 you better start saving for retirement. If you are younger I don't see nothing wrong in temporarily stopping your retirement savings for down payment. Make sure it is temporary though. Go to this website DaveRamsey.com
4. First thing that you should invest in is a house. But it depends on the amount of write-offs you may need and also the predicament that you are in. the benefit of a house is that you can write off the property tax and interest. Also if you own a business or do business out of your house, you can write off other parts of your house. but if you don't have some of the writeoff capabilities of a house you should start investing in your retirement account as early as possible and let the "eighth wonder of the world" (compound interest) work for you.
5. You have to do both. If your employer provides a match in a 401k plan, then you must do this first as that is like getting free money. Money invested in your 401k is not taxed (its subtracted from your taxable earnings thereby lowering your income tax) and also grows tax-deferred (you could suffer temporary losses in your account-- don't worry since you could have several years before you retire). Then, once you start your 401k plan, you can start saving for a downpayment. Note that the interest earned on your downpayment savings will be taxed (another reason to pursue the 401k plan first). Don't be tempted to withdraw money from your 401k for anything. In many parts of the country, housing prices are coming down because of the overbuilding and speculation. You have the luxury of time to accumulate a good-sized downpayment. When the time comes, don't buy more house than you can reasonable afford and don't stop those 401k contributions. You should aim for at least a 20% downpayment, but 10% can suffice if mortgage rates remain low. The trick is trying to get the best return on your money. If rates are real low (less than 5%), then adding to the downpayment or paying extra principal once you have a mortgage is like getting less than 5% on your money when investing the money may produce more. Much of this will also depend on your tax bracket and the value of the mortgage interest deduction. But your mortgage payment should not take up so much of your budget that you have no room for retirement savings or other savings. You should continue to save in a regular savings account and for retirment after the house purchase. If you can't, then you have purchased too expensive of a house. Houses have been good investments over long periods, but better to have cash than an illiquid asset like a house on which you may not be able to sell or have to sell in a downmarket (not to mention paying a hugh real estate commission).
6. The house is extremely important...make that your first priority. DESIGNATE whatever savings you manage to go at a certain rate toward that house...but just as surely put some part of your savings into an IRA every year...even if it's only hundreds of dollars...get it started and add to it.. Just make sure you favor the "saving for a house" for the first few years...maybe 80% of what you manage to save should be put there... It's hard, and some things have to be " put off" but once you own it, it works for your future, too. ( making it possible to own something better as it goes up in value, or being a part of your retirement money also ) You'll do okay...especially if you stick to your idea of making the biggest down payment possible...