My 21 year old son just closed on a construction loan. I guess rates are going up cause he got it at 7.375. Total construction cost is roughly 300000. I he currently has 75,000 saved to cash flow. He get 1500 a week cleared deposited. He has been maxing his roth last 3 years. He does have a pension he pays into. My question, with rates border line what the market is making in roth, should he stop and have more cash to put toward house. Im guessing loan amount will be roughly 175,000 when it comes to closing.
At 7.375%, I’d definitely compare the guaranteed benefit of paying down the loan with continuing Roth contributions. Since he’s only 21, keeping the Roth going has a lot of long-term value, but construction can bring unexpected expenses. I’d prioritize a solid emergency fund first, then balance extra payments and investing.